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Lessons in Casualty Pricing: Insights and Challenges from the American Market

Join industry experts as they unpack the complexities of casualty pricing in America, addressing cultural clashes, actuarial puzzles, and benchmarking challenges. James Orr from Tillinghast moderates discussions with Doug LaCoss from Converium and John Buchanan from Platinum Re, highlighting the significance of data sharing, loss distributions, and the unique nature of insurance cover. Discover why lagging measures, economic impacts, and inflationary factors complicate exposure assessments, making effective pricing a challenging yet crucial aspect of the insurance landscape.

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Lessons in Casualty Pricing: Insights and Challenges from the American Market

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Presentation Transcript

  1. Casualty Pricing Lessons from America James Orr

  2. Order of Play • Moderator’s Opening Remarks • James Orr, Tillinghast • Culture Clash • Doug LaCoss, Converium • Solving the Actuarial Puzzle • John Buchanan, Platinum Re • Questions & Answers • Luncheon • 12:30 to 13:30

  3. Let’s remind ourselves… • Why this is so difficult • no direct measure of exposure • long lead times and slow development • inflationary effects • economic • judicial • Why this matters • APH • “laddering”, Enron, WorldCom

  4. The value of benchmarking • Insurance cover is • unique/bespoke • rarely traded in a secondary market • So • no common currency • not hedgeable

  5. Examples of benchmarking • GLD – Global Loss Distributions • floated in late 90s • not presently live, but much needed • CLIPS – Commercial Lines Insurance Pricing Survey • US since 2003 • UK variant launching in 2006

  6. Global Loss Distributions • Data-sharing benchmarking • Motor and General Liability • Computing various size of loss distributions • 4 scenarios for each country • Assess impact of assumptions by scenario • Benchmarking Process Adjust data for loss development and claim inflation Filter claims, fit curve & calculate excess factors All-industry application of results

  7. Comparison of Actual and Fitted Data Global Loss Distribution – Example Exhibit

  8. Comparison of Expected Excess Loss Cost Global Loss Distribution – Example Exhibit

  9. Incurred Loss DevelopmentUnited Kingdom Global Loss Distribution – Example Exhibit Development Years

  10. Our speakers • Doug LaCoss, FCAS • Head of Actuarial Pricing – UK/Ireland • Converium • John Buchanan, FCAS • Senior Vice President • Platinum Underwriters Reinsurance Inc

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