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European vs. North American Insurance Pricing: Insights & Analysis

Understand European and North American insurance pricing approaches with discussions on education, roles, market concentration, financials, and regulation, including insightful perspectives, numbers, and data sources.

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European vs. North American Insurance Pricing: Insights & Analysis

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  1. 7 May 2007 European Pricing ApproachesCARePhiladelphia, PA Timothy Aman, FCAS MAAA Managing Director, Guy Carpenter Miami

  2. Introductions • Isaac Mashitz, Chief Pricing Actuary, Swiss Re (Armonk, NY) • Bryan Ware, Director, Navigant Consulting (Philadelphia, PA) • Steve White, Managing Director, Guy Carpenter (Seattle, WA) • Tim Aman, Managing Director, Guy Carpenter (Miami, FL)

  3. Perspective • Numbers • Education • Roles • Perspective • Competitive Environment • Financials • Regulation • Data

  4. Numbers Source: www.actuaries.org

  5. Numbers • Insurance premium • Europe $1,241 billion • North America $1,222 billion • Life insurance premium • Europe $ 759 billion • North America $ 552 billion • Non-Life insurance premium • Europe $ 482 billion • North America $ 670 billion Source: www.swissre.com

  6. Numbers Source: www.actuaries.org, www.swissre.com

  7. Education • Europe • In general, university education in actuarial science • Some countries require graduate studies and/or additional examinations • Combined Life / Non-Life curriculum • North America • Examination system • Separate Life (SOA) and Non-Life (CAS) societies

  8. Roles • How many actuaries are working in P/C actuarial roles? • Europe • Research focus • Non-actuarial positions • North America • Applied (pricing, reserving) focus

  9. PerspectiveInsurance • Insurance business mix EuropeUS / Can • Property 24% 27% • Motor 38% 41% • Liability 10% 14% • WC 0% 11% • A&H 17% 2% • Other 11% 5% Source: Axco

  10. PerspectiveReinsurance • Reinsurance business mix1EuropeUS / Can • Property 46% 34% • Motor 21% 8% • Liability & WC 20% 35% • Other 3% 23% • Reinsurance type2 • Proportional 70% 50% • Non-Proportional 30% 50% • P & C Reinsurance Demand3 $ 51 b $ 65 b Source: 1 Axco, 2 Estimated, 3 A M Best Co

  11. PerspectiveCY Combined Ratios of major non-life markets Source: Swiss Re Economic Research $ Consulting

  12. PerspectiveMarket Concentration • Insurers • Europe 30% market share for top four • North America 18% market share for top four Market share for top ten non-life insurers Sources: Canadian Insurance, A M Best, Swiss Re Economic Research & Consulting

  13. PerspectiveMarket Concentration • Reinsurers • Europe > 40% market share for top two • North America < 20% market share for top two Source: Estimated

  14. Competitive Environment • Europe • Open insurance rating • Market price “communication” between competitors • Insurance • Reinsurance • North America • Insurance rate regulation varies by state • Insurance rating bureaus • Strict antitrust regulation • Open reinsurance rating

  15. Financials • Europe • International Accounting Standards • “Embedded value” reporting • Calendar Year Quota Share treaties • Solvency focus • North America • GAAP accounting • More working-layer XL treaties • Earnings stability focus

  16. Regulation • Europe • Pan-European regulation • Solvency II • Market-value liabilities • North America • State regulation • Appointed actuary • Statutory liabilities

  17. Data • Europe • Little industry data • Reinsurer data access • North America • Data filing requirements • Industry statistical databases • Industry trend factors, increased limits factors, loss costs

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