Casualty Loss Reserve Seminar

Actuarial & Insurance Services Risk Management Consulting Group

Actuary and Risk Manager -- A New Relationship

Casualty Loss Reserve SeminarSeptember 18, 2000

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Introduction

Introduction

Partners

Examples

Opportunities

Evolution

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Evolution

Introduction

Partners

Examples

Opportunities

Evolution

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Evolution of the Risk Manager

The Insurance Administrator

The Insurance Buyer

The Manager of Risk

The Enterprise Risk Manager

The Chief Risk Officer

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Evolution of the Risk Manager

InsuranceAdministrator

InsuranceBuyer

EnterpriseRisk

Manager

• Insurance Agent purchases insurance

• Insurance Administrator Pays the Premiums

• Handles other Administrative Activities

Certificates

Auto Cards

• Management began to notice expense of insurance on income statement

• Ins. Admin. was put in charge of reducing the price

• Cost of insurance continued to increase

• Ins. Buyer began to look for reduction opportunities

Reduce Losses

Manage claims

Alternative risk financing

• Stepping beyond just property and casualty

• Risk is risk, whether fortuitous with no opportunity for gain, or other business risk

• Board becomes aware of the significance of managing risk, and elevates the status of risk managers within the organization

Key Activities

Today

RiskManager

ChiefRiskOfficer

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Partners

Introduction

Partners

Examples

Opportunities

Evolution

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Partners

Insurer

Risk Manager

Actuary

Insurance Broker

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Partners

A well conducted actuarial analysis can

be one of the most valuable decision-

making tools available

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Partners

Actuary’s involvement in renewal process Independence working for the risk manager

Better knowledge of risk portfolio

Adds credibility to the process

Supports reasonableness of premiums

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Examples

Introduction

Partners

Examples

Opportunities

Evolution

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Examples

Quantify retained losses

Aid in program structure

Allocate cost of risk

Evaluate mergers & acquisitions

Verify letters of credit

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Examples

Captive Insurance Subsidiaries

Balance Sheet Reserves

Loss Projections

Premium Reasonableness

Portfolio Transfer

Funding of Retentions

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Opportunities

Introduction

Partners

Examples

Opportunities

Evolution

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Opportunities

ANNUALLY?? Update previous loss analyses

Evaluate impact of changes to corporation

Compare to current market conditions

MARKETPLACE PRODUCTS Asbestos Liabilities

Other Environmental Liabilities

Loss Portfolio Transfers