Category Archives: Risk

Presentation by Dr Geraldine Kaye at the Regional ASHK ERM Conference Macau on 29th April 2013

Actuaries are absolutely suited for Chief Risk Officers (CRO) posts and analysing ‘Big Data’ according to Dr Geraldine Kaye, managing director of actuarial recruitment consultancy, GAAPS Actuarial.

At a speech given to The Actuarial Society of Hong Kong in Macao in April, Dr Kaye told delegates “For some time the newly introduced position of CRO was seen as requiring someone of qualitative mode. It is now more appreciated that it needs a more quantitative approach using the modelling skills of the actuary. I feel sure it will eventually settle somewhere in the middle. Similarly we are beginning to see the revival of actuaries as CEOs.

However, the greatest challenge to an actuary who aspires to be a high flyer, is that to succeed they must also be able to communicate their ideas at Board level and be able to zoom in and out effectively from one aspect to another when questioned. They must be able to distil issues and explain, and also convince the recipient why the point is important.

Similarly, in many of the actuarial consultancies we are seeing the merging of the actuarial and risk teams. But this is a two-edged sword for actuaries since although it provides greater breadth of opportunities for actuaries, it also allows those without the qualification to encroach on traditional actuarial territory.”

Turning to the vast increase in legislation with financial services, Dr Kaye feels abilities connected with risk management and governance are required, and in these areas is becoming more accepted that actuaries are ideal. She added “Changes in financial services regulation whether or not it is good or bad for Society in general, will always increase jobs for actuaries in the short to medium term.

As actuaries, it is the long term that concerns us. Over the past few years we have seen crisis after crisis increasing job opportunities for actuaries, but for the moment there appears to be a brake. Will the actuaries no longer needed for these regulatory and compliance roles find other roles more suited to their abilities and more productive to Society. The short answer is yes. A new area that is suddenly opening up and becoming fashionable is ‘Big Data’.

Actuaries talk about analytics and have not pushed the areas of use to its full potential and seem to be missing out to other professions such as statisticians who simply call it ‘Big Data’. What many insurance companies are beginning to realise is how important is the accuracy and accessibility of the data they retain. The more accurate the data, the less risk associated to calculations associated with it and therefore there is a knock on effect to solvency calculations and thus to level of reserves required under Basel etc.”

Dr Kaye concluded by telling delegates, it was heartening to hear from the consensus of speakers that the world is in recovery and she would like to concur with this message and add that jobs for actuaries are definitely on the increase.

Below are some of the pictures from the conference.

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Presentation by Dr Geraldine Kaye at the Regional ASHK ERM Conference Macau on 29th April 2013

Presentation by Dr Geraldine Kaye at the Regional ASHK ERM Conference Macau on 29th April 2013

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Joint Networking Evening: Trading Longevity Risk – hosted by PRMIA and The Actuarial Profession

When: 17th December 2012, 17:30 to 20:30

Where: Staple Inn Hall, London WC1V 7QJ

A helpful event where delegates gain a range of perspectives on the emerging markets for trading longevity risk.

Panellists will present their views on a number of issues such as: overview of the market and its economic function, key risks involved and challenges, emerging themes, the role of regulation and Solvency II and perspectives from risk sellers and buyers.

Speakers include:

  • Douglas Anderson, Hymans Robertson LLP
  • Pretty Sagoo, Deutsche Bank AG
  • David Epstein, Aviva
  • Emma McWilliam, Milliman

To book your place email eventmanagement@actuaries.org.uk

Male drivers ‘more likely to use telematics for insurance’

A poll into the use of telematics by drivers has found that more male drivers are willing to have their vehicle monitored for insurance purposes than women.

The survey found that 60% of men would be interested in using a device compared to only 40% of women. This is despite the ruling that insurers will no longer be able to use gender to assess insurance rates, causing women’s insurances prices to rise this December.

Duncan Anderson, global head of property, casualty insurance pricing and product management at Towers Watson said: ‘With the ban on the use of gender in setting insurance prices from December 21, young female drivers could materially benefit from the use of telematics.”

44% of all drivers identified insurance discounts as the most attractive benefit of using a telematic device.

Rating outlook for UK life firms stable, says Fitch

The rating outlook for the UK life assurance sector remains stable, according to a new report by statistical rating organisation Fitch.

Fitch’s latest outlook assumes a weak economic recovery, with modest GDP growth. It is yet to account for shocks to the economy, but can be updated if unexpected events were to occur.

Fitch’s insurance team senior director David Prowse said: “In contrast to several European insurers, most UK life insurers have negligible direct exposure to the sovereign debt of Greece, Italy, Ireland, Portugal and Spain – typically less than 5% of shareholders’ equity.”

Motor rates show minor fall in July

Motor insurances prices have remained stable this month with prices dropping 0.6% compared with last month, according to Tiger.co.uk’s monthly car insurance price monitor.

Prices fell 1.8% when compared to the same period last year. Analysis of prices by gender revealed another significant movement towards greater equality in policy pricing. Tiger Watch estimated that female drivers have seen their policies increase in price by around 0.1%, whilst prices for male drivers dropping by 1.2% compared to a month ago.

Women have held the historical policy price advantage but this has been eroded since March. Since then car insurance prices for women have soared by 5.6% – equivalent to an annualised inflation rate of around 17% – whilst male prices have dropped by 1.6%.

 

This means males are paying around 5% more for their policies in July 2012 than women drivers, whereas they were paying some 12.4% more just four months ago as the gender gap narrows in anticipation of the introduction of the EU Gender Directive in December 2012 that prohibits the use of gender as an insurance rating factor.

Month Male policy prices compared to women

March 2012 +12.4%

April 2012 +10.3%

May 2012 +9.8%

June 2012 +6.1%

July 2012 +4.8%

Tiger.co.uk commercial director Andrew Goulborn said: “What we are seeing is, broadly, continued stability in car insurance prices – they’ve been pretty flat for the last 12 months. However since March we’ve seen female pricing increase by 5.6% – more than five times the current rate of inflation. Essentially women drivers are seeing the results of what we consider to be an unfair EU ruling that comes into effect at the end of 2012.”

Climate body calls for flood defence upgrade

A further £20m a year needs to be spent on flood defences to keep pace with climate change, according to a new report from a climate change body. If this does not happen, the number of homes and businesses at the highest risk of flooding could almost double to 610,000 from its current level of 330,000 in the next 20 years.

The report by the Adaptation Sub-Committee (ASC) of the Committee for Climate Change, which advises the government, found that the number of properties built on flood plains has increased by 12% over the past 10 years, compared with a 7% rise outside flood-affected areas.

Citing figures from the Environment Agency, The ASC noted that at the same time, funding for flood defences from both public and private sources is decreasing. It was 12% lower for the current spending period compared with the previous period, after inflation.

Take-up of measures to protect individual properties from flooding is 20 to 35 times lower than the rate required to safeguard all properties that could benefit, the report said.

The ASC estimates that if the additional £20m was spent on flood defences, only 160,000 properties would be at significant risk of flooding by 2035.

ASC chairman Lord John Krebs said in a statement: “We must take adaptation more seriously if we are to manage the growing risks of floods and droughts. This can be done by investing more in flood defences, faster roll-out of water meters and giving serious consideration to where and how we build our housing and infrastructure.

“Without action by households and businesses to prepare for these inevitable weather extremes the country faces rising costs, unnecessary damage and future disruption.”

 

 

Thought Leadership Lecture: The Challenge of Climate Change

A lecture on the implications on climate change faced by financial institutions will take place at Staple Inn Hall this month. Starting at 3.30pm on Tuesday 3rd July the event will finish at 6.30pm with a chance for guests to ask questions to speaker Professor Sir Brian Hoskins.

Climate change due to human activities is a challenge to scientists, engineers, industry, the financial sector, policy makers and society in general. A discussion will be given of the approach by the UK Climate Change Committee and the implications of the acceptance of that advice.

Sir Brian Hoskins is Director of the Grantham Institute for Climate Change at Imperial College and Professor of Meteorology at the University of Reading. He is currently on the Board of the Met Office and chairs its Scientific Advisory Committee, and he is a member of the UK Committee on Climate Change.

For more information please contact Staple Inn Hall on 020 7632 1498 or email eventmanagement@actuaries.org.uk