More Current IssuesDerek Newton

CIGI Seminar 17 May 2005

More Current Issues : Agenda

A word from our sponsors Some other recent current

issues What could/should we do

in the future?

More Current Issues : what is the Committee supposed to do?

Monitor current developments in general insurance Monitor external issues (including the work of other committees)

that might impact upon general insurance business/actuaries Report to/advise GI Board Formulate appropriate representations to external bodies Monitor the activities of other Practice Boards Support the GIRO and ECPD Committees Produce regular newsletter for members re current issues Liaise with other GI Committees (especially GI ARIC)

More Current Issues : who is on the Committee?

Derek Newton (Chairman) Peter Stirling (Secretary) Kate Angell David Costello Wendy Hawes Sheree Howard Tony Jordan Armoghan Mohammed Ruth Stephens Gerry Sweeney

and Laurence Townley

4 consultants 2 reinsurers 2 Irishmen 3 company actuaries 1 regulator 1 Institute/Faculty person

More Current Issues : recent index

Government and regulatory issues Solvency II International news Asbestos angle Compensation corner Other claims/legal issues Periodical payments and the Courts Act 2003 Other news

More Current Issues : at the Chairman’s request

Internet revolution APH – what next? Can we stop the “cycle"? Solvent schemes “Treating Customers Fairly” – what does this mean

for actuaries?

More Current Issues : Government and regulatory issues

OFT and DWP liability reviews Insolvency Directive EU Physical Agents (Vibration) Directive Single European reinsurance market Gender discrimination

More Current Issues : Solvency II

Dr Müller’s Casebook Solvency II

Protect policyholders Comparable and

transparent Match risks Simple Up to date Consistent with IASB Avoid 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

CEIOPS

IAISIFRS/ IAS

UK actuarial

profession

Groupe Consultati

fIAA

Other European actuarial

professions

Annette Olsen’s group

GI Solvenc

y II team Life

Solvency II

team

Comité Européen

des Assurances

ABI

Legal

Accounting

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 GlossaryEC 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”

Man attacked by Dyson Woolf attacked by Dyson Conker trees and lime trees Candles Tobacco

More Current Issues : claims/legal rulings (and other news)

Exxon Valdez removal of debris/LMX spiral

WTC, Enron, WorldCom and laddering

Hurricanes, earthquakes and tsunami

NHS recoveries The next latent claim

Glaucoma from PC use Deafness from iPods

More Current Issues : what could/should we do in the future?

Main product currently the Current Issues Newsletter Does it meet anyone’s needs? How should it be enhanced?

What else should we be covering? what has the greatest impact on the market, on consumers, or

on us as general insurance actuaries? on what do we have something to contribute ?

How best to identify issues as (or even before) they appear over the horizon?

How best to review/deal with these issues?

More Current Issues Derek Newton

CIGI Seminar 17 May 2005