Advanced Topics Panel and Small Group Project Moderator: Alice Underwood, FCAS, Executive Vice...
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Transcript of Advanced Topics Panel and Small Group Project Moderator: Alice Underwood, FCAS, Executive Vice...
Advanced Topics Panel and Small Group Project
Moderator:Alice Underwood, FCAS, Executive Vice President, Willis Re Inc.
Panelists:Charles Goldie, FCAS, Senior Vice President, Manager of Specialty Lines, Partner Re U.S.Jeff Dollinger, FCAS, Senior Vice President & Chief Actuary, Endurance Reinsurance Corporation of AmericaDaniel R. Kamen, FCAS, Vice President, Folksamerica Reinsurance Company
Paul Ingrey’s “Reinsurance Clock”
Pricing starts to drop
Companies compete to increase market share
Prices fall dramatically
Profits slide
Results horrible
Pricing CANNOT go lower
EUPHORIA!
All companies flourish
Capacity gets expensive
Prices up sharply
Crunch
AM Best writes this decade’s “letter of concern”
Source: David Skurnick, “The Underwriting Cycle”http://www.casact.org/pubs/forum/93sforum/93sf377.pdf
What Triggers Underwriting Cycles?
• Catastrophic events• New legal theories• Interest rates• Wall Street• The demands of growth• Naïve capital
What Fuels Underwriting Cycles?
• You get the money FIRST…
…and you pay claims LATER• Incentive plans• “Feeding the Beast”• Herd mentality• Actuaries?
What Dampens Underwriting Cycles?
• Regulation
• Nimble capital
• Actuaries?
What’s the Actuary’s Role?