More Current Issues Derek Newton CIGI Seminar 17 May 2005

More Current Issues : Agenda nA word from our sponsors nSome other recent current issues nWhat could/should we do in the future?

More Current Issues : what is the Committee supposed to do? nMonitor current developments in general insurance nMonitor external issues (including the work of other committees) that might impact upon general insurance business/actuaries nReport to/advise GI Board nFormulate appropriate representations to external bodies nMonitor the activities of other Practice Boards nSupport the GIRO and ECPD Committees nProduce regular newsletter for members re current issues nLiaise with other GI Committees (especially GI ARIC)

More Current Issues : who is on the Committee? nDerek Newton (Chairman) nPeter Stirling (Secretary) nKate Angell nDavid Costello nWendy Hawes nSheree Howard nTony Jordan nArmoghan Mohammed nRuth Stephens nGerry Sweeney and nLaurence Townley n4 consultants n2 reinsurers n2 Irishmen n3 company actuaries n1 regulator n1 Institute/Faculty person

More Current Issues : recent index nGovernment and regulatory issues nSolvency II nInternational news nAsbestos angle nCompensation corner nOther claims/legal issues nPeriodical payments and the Courts Act 2003 nOther news

More Current Issues : at the Chairman’s request nInternet revolution nAPH – what next? nCan we stop the “cycle"? nSolvent schemes n“Treating Customers Fairly” – what does this mean for actuaries?

More Current Issues : Government and regulatory issues nOFT and DWP liability reviews nInsolvency Directive nEU Physical Agents (Vibration) Directive nSingle European reinsurance market nGender discrimination

More Current Issues : Solvency II nDr Müller’s Casebook nSolvency II nProtect policyholders nComparable and transparent nMatch risks nSimple nUp to date nConsistent with IASB nAvoid extra capital costs

 Phase 1  KPMG Report  Sharma Report  EU Report 2003  Overall solvency  Three-pillar approach useful  Incentive to manage risks More Current Issues : Solvency II Pillar I Target capital Safeguard capital Pillar II Risk mgnt (rules) Reg’y review (Co. specific) Pillar III Encourage market discipline Accounting disclosure (fair value) Policy-holder disclosure

 Phase 2 More Current Issues : Solvency II CEIOP S IAIS IFRS/ IAS UK actuarial profession Groupe Consultati f IAA Other European actuarial professions Annette Olsen’s group GI Solvenc y II team Life Solvenc y II team Comité Européen des Assurances ABI Lega l Accountin g IT

Technical Pillar 1 issues  Definition of Technical Provisions  Prudence in outstanding provisions  Discount rate  Equalisation reserves  Target capital  risk measure  time horizon  confidence interval  Operational risk  Correlation More Current Issues : Solvency II issues

CEIOPS  First wave (June 2005)  MCR, SCR: SCR = MCR + buffer?  Not prescriptive about internal models  Second wave (October 2005)  Third wave (February 2006) IAIS  “Cornerstones” paper (February 2005)  8 cornerstones  Prudent, risk sensitive, explicit, range of control levels, use of standard & more personalised approaches More Current Issues : Solvency II recent papers

Groupe Consultatif  Glossary EC  Started drafting directive  Possible amendment to framework to consultation  Thinking behind Solvency II, including:  SCR 0.5% probability of ruin  Provisions at “best estimate” plus risk margin with 75% confidence  Outline of framework directive  Lamfalussy  2010? More Current Issues : Solvency II recent papers

More Current Issues : “Compensation Corner” nMan attacked by Dyson nWoolf attacked by Dyson nConker trees and lime trees nCandles nTobacco

More Current Issues : claims/legal rulings (and other news) nExxon Valdez nremoval of debris/LMX spiral nWTC, Enron, WorldCom and laddering nHurricanes, earthquakes and tsunami nNHS recoveries nThe next latent claim nGlaucoma from PC use nDeafness from iPods

More Current Issues : what could/should we do in the future? nMain product currently the Current Issues Newsletter nDoes it meet anyone’s needs? nHow should it be enhanced? nWhat else should we be covering? nwhat has the greatest impact on the market, on consumers, or on us as general insurance actuaries? non what do we have something to contribute ? nHow best to identify issues as (or even before) they appear over the horizon? nHow best to review/deal with these issues?

More Current Issues Derek Newton CIGI Seminar 17 May 2005