Analysing the disconnect between the reinsurance submission and global underwriters’ needs

Analysing the disconnect between the reinsurance submission and global underwriters’ needs

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Speaker: Ana Mata

This research paper fills the void in the currently available actuarial literature related to information required by the reinsurance underwriter but often lacking when pricing property per risk coverages worldwide. Results from surveys of members in the UK, European and US actuarial communities, as well as others in the related insuring communities, clearly indicated a distinct disconnect between the information desired by reinsurers and the information commonly included within a cedent's submission. Underwriters are unable to refine the pricing of a contract because of this disconnect. Complicating the matter is the fact that this disconnect can occur in one or several steps in the transaction, beginning with the retail agents and/or brokers up through any level of reinsurer.
The main sections of the paper describe various primary and reinsurance company considerations, and a ranked importance of various exposure and experience pricing data elements. Each of the main exposure data elements of amounts of insurance definitions, exposure submission types, ground-up loss ratio estimation methods, the usefulness of historical profiles, and granular importance of each of the elements of construction, occupancy, protection, and exposure is described in detail. Similarly, information related to experience rating such as large claim information including the link to exposed values, various price monitors, and using property cat submissions are reviewed in detail. Information related to various competitive marketplace phenomena, as well as practical reference guides was also included.
The original paper was the result of a 15 month collaboration between the IFoA and the CAS, including 17 worldwide actuaries, underwriters, and academics. The original paper was published in March 2016, and won the Brian Hey Award for best paper at the Annual GIRO conference in October 2016. It was then accepted with additions for the British Actuarial Journal to be published in the Summer of 2017

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