1. Canadian Institute of Actuaries L’Institut canadien des actuaires
2006 Seminar for the Appointed Actuary
Colloque pour l’actuaire désigné 2006

2. Reinsurance – Pandemic Risk
Reinsurance solutions
Role of the Actuary

3. Reinsurance Solutions
Define the Risk
What pandemic coverage exists within the portfolio to be reinsured?
Factor in Uncertainty
Coverage definitions may be given liberal interpretations
Consider multiple events

4. Uncertainty – Excess Mortality
EID Journal Vol 12, No 1, January 2006
1918 Influenza: The Mother of All Pandemics

5. Defining the Risk - Example
Group Life Industry In-Force 2004*
$8, B
Sample Ins Co 2004 Group Life In-Force
$2, B
Estimated Market Share
23%
Moderate
Severe
US Pandemic Industry Loss**
$11.20 B
$54.40 B
Insurance Co Share of Loss
$2.39 B
$11.59 B
*Source: A.M. Best Co.
**Source: III estimates a Moderate Scenario based on 1957 and 1968 pandemics, and a Severe Scenario based on 1918 pandemic (Group Life)

6. Reinsurance – Pandemic Risk
5 Risk Categories
Mortality
Morbidity
Reinsurance Credit Risk
Economic Risk
Operational Risk

7. Reinsurance – Pandemic Risk
Types of Reinsurance Structures:
Abnormal Mortality Stop Loss
Occurrence-based Catastrophe Coverage
Index-Based Coverage

8. WHO Pandemic Stages

9. Reinsurance – Pandemic Risk
Role of the Actuary:
“Actuaries have practical business sense, the creativity to apply training and experience to new problems and provide innovative solutions, and the communication skills required to convince both colleagues and clients.”

10. Sources & Events Useful Sources: www.pandemicflu.ca www.soa.org
Standard & Poor’s “Determining the Insurance Ramifications of a Possible Pandemic”
CBO Report “A Potential Influenza Pandemic: Possible Macroeconomic Effects and Policy Issues” December 8, 2005 revised July 27, 2006
Upcoming events:
IBC – Pandemic Preparedness Workshop, Oct
SOA Risk Management Section Pandemic Influenza Webcast, Oct