Impact and Opportunities From China's Plastic Scrap Ban

China is upending the global plastics market. The world’s biggest user of scrap has stopped accepting shiploads of other countries’ plastic trash as it phases in a new ban.

Insurance Sector Global Reports

Compilation of reports and outlooks for 2017 - 2018 covering the global market, Malaysia's Takaful and Vietnam's growing insurance sector.

Blockchain and the Insurance Industry

The financial industry is at a “crossroad” and risks future growth if it does not adapt to changing consumer behaviour. By embracing blockchain, insurers can benefit from more efficient underwriting, the development of bespoke products, and a smarter way to process and manage claims.

BNM's Comments on the State of Malaysia's Insurance

Key points from governor’s Keynote Address at the Malaysian Insurance Summit (MIS) 2017.

Product Spotlight - Graphene Application and Potential

1. Sir Andre Geim and Sir Konstantin Novoselov, isolated and characterised graphene in 2004 with remarkable properties – strong, light, almost transparent, and an excellent conductor of heat and electricity.

2. Sheets of graphene held together by van der Waals bonding make graphite. Graphene sheets are composed of carbon atoms linked in hexagonal shapes with each carbon atom covalently bonded to three other carbon atoms. Each sheet of graphene is only one atom thick, and each graphene sheet is considered a single molecule.

3.  Graphene Market has been gaining remarkable traction, owing to the extensive use of graphene for power storage and composites with a graphene market revenue at USD 20 million in 2016.

4. R&D on this revolutionary material continues with more than $2.4 billion in funding committed globally.

Generalized Linear Model - Part 3 - Overcoming Rigid Pricing Structure and Alternative Use

1. the most important elements of the price,is the expected claims cost and the demand for the product.

2. There are other considerations, such as a more in-depth treatment of variable expenses, investment income, cash flows, claims development, return on capital and fixed expenses.

3. How we can build these different rating components into a pricing system.

4. Most statistical analyses are compromised in order to fit into a rigid table design from which the premiums are calculate. The situation is further exaberated when profit margins especially when loads and discounts given for a variety of reasons.

Generalized Linear Model - Part 2 - GLM Functions for Pricing Structures

DEVELOPING OPTIMAL PRICING STRUCTURES
1. There are four basic components of estimating the premium to be charged; firstly the risk premium, secondly the direct policy related expenses, thirdly a contribution to fixed overhead expenses and finally a profit margin.

2. The industry partices with profit load and risk premium relativities for different customers being combined in some way. Consequently, in a competitive market, marketing discounts and/or rating action in response to competition become indistinguishable from rating action taken in response to changing claims experience.

3. if it were possible to anticipate an individual customer's response to the new business or renewal terms offered, then a probabilistic approach could be adopted in setting both the contribution to overheads and the profit margin in order to maximise expected profit.

4. The model needs to be flexible enough to take into account the individual characteristics of each policyholder and be able to respond to the dynamics of the market place. Under certain market conditions or market segments it is quite plausible that the profit loads can be negative.

Generalized Linear Model - Part 1 - Multiple Regression Approach

1. A dynamic pricing system can be built for personal lines business, whereby profit loads and risk premiums can be tailored to the individual behavioural characteristics of the customer. 

2. The objective is to use as much information as input to these models in order to establish which risk factors are the most predictive.

[Framework] Key lessons from national industry 4.0 policy initiatives in Europe

1. Exploring the essential components of the national flagship I4.0 policies of Spain, UK, France, Italy, Germany, the Czech Republic, Sweden and the Netherlands.

3. Although  united in their goals, the I4.0 policies differ in their policy design, funding approaches and implementation strategies.

China's Overall Global Impact and Brief on the Chemical Industry's Impact

1. China is the world’s second-largest economy. From 2000 to 2015, China has grown from 3.6% of global GDP to 14.9%, while the United States has shrunk from 30.9% to 24.4%.

2. China plays a prominent role in the global economy on multiple fronts, including trade, foreign direct investment, and even outward direct investment. 

China's Next Move and Four Potential Scenarios

1. China now appears to be changing from an adapter to a driver of globalisation. In effect, the next China is upping the ante on its connection to an increasingly integrated world—and creating a new set of risks and opportunities along the way.

2. China is transforming and rebalancing to move away from an export-based economy to a more consumption-based one. This transition is not without challenges, and policy actions could determine whether a downward trend in China's economic growth since the global financial crisis leads to a hard landing, Japan-style stagnation

3. China Dream is taking shape as a concrete plan of action, centered on China’s One Belt, One Road (OBOR) plan supported by a new set of China-centric financial institutions—the Asian Infrastructure Investment Bank (AIIB), the New (BRICS) Development Bank, and the Silk Road Fund.

3. Do the figures reflect economic restructuring? Services now count for more than half of the economy, high-tech manufacturing is expanding rapidly, and the issuance of new credit is slowing. But despite these efforts, productivity is still flagging.

[Misconduct] Game Changing FCA Fines Senior Officer for Pension Transfer Failings

1. FCA launched a investigation in FGS McClure Watters (FGS) and Lanyon Astor Buller Ltd (LAB) and subsequently fined Watters  £75,000 for failing to exercise due skill, care and diligence in his role as compliance oversight officer

2. the investigation found that Watters failed to take reasonable steps to ensure that the process in place at FGS and LAB, for giving advice on ETV pension transfer exercises, was adequate and met regulatory standards. 

Provision of Risk Margin for Adverse Deviation (PRAD) Models - Characteristics, Pros and Cons

1. Many countries in the region are using the RBC (Risk Based Capital) approach to determine the capital requirements.

2. The PRAD shall be determined such that the overall valuation of guaranteed liabilities secures 75% sufficiency.

3. Why do we need risk margins? As we progress, we are facing an Increased uncertainty in the current estimate of liabilities and its trends. 

4. Different countires have different names for risk margins.

Capital Adequacy Ratio for Banks and Insurers

1. The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted assets ratio for a bank is usually expressed as a percentage. The current minimum of the total capital to risk-weighted assets, under Basel III, is 10.5%.

WTO's Report on Non-Tariff Measures and ASEAN Tackling Trade Barriers

1. Non-tariff measures that can potentially affect trade in goods present the multilateral trading system with a basic policy challenge – how to ensure that these measures meet legitimate policy goals without unduly restricting or distorting trade. The same challenge applies to measures that can affect trade in services.

2. The motivations for using non-tariff measures and services measures have evolved, complicating the policy panorama, but not changing the core challenge of how to manage the tension between public policy goals and trading opportunities.

3.  While intra-Asean trade has been soaring around 25 per cent, it is far below what the European Union has achieved, which is at 63 per cent of the total trade in 2015, whereas the North American Free Trade Agreement (Nafta) registered almost 50 per cent of the intra-group trade of its total exports in the same year

Valuation in Derivatives Markets and adopting Multiple Discount Curves

1. Derivatives are Financial transaction whose value depends on the underlying value of the reference asset concerned.

2. A contract that specifies the rights and obligations between two parties to receive or deliver future cash flows (or exchange of other securities or assets) based on some future event.

3. Historically, all derivative valuation was performed assuming a single standard discount curve (LIBOR). This methodology was based on the belief all market participants had equal credit risk. However during the crisis, the assumption that each institution had equal credit risk was clearly invalidated.

Applying Smart Beta in Alternative Markets

1. If you construct a value fund with small stocks that kicks out initial public offerings, bankruptcies and small companies that aren’t profitable, the screening of those duds is smart beta.

2. The typical S&P 500 index fund owns all 500 stocks in the index but doesn’t invest an equal amount in each. Traditional index fund weights are determined by market capitalization. However Smart-beta indexes tilt toward value stocks that perform well over time.

3. Smart-beta ETFs are rules-based. The rules are established in advance. Using the PowerShares S&P 500 ETF (SPLV) as an example, the fund takes the 100 least volatile stocks in the broader S&P 500 index, and then every three months it rebalances by selling what no longer fits its rules-based criteria and buys what does fit. 

Automotive Hubs in ASEAN

 As the automotive industry grapples with the fundamental changes in their business models. One thing remains constant: they will need to build the vehicles. They will need to build lots of them. They will need razor-sharp supply chains, economies of scale and supportive state structures. All of this indicates a strong likelihood that automotive ‘hubs’ will continue to play a major role in ASEAN's vehicle production.

Testing and Monitoring Risk Margin

1. A stochastic risk margin will be based on a stochastic model capable of predicting the probability distribution of the total outstanding claims, as the 75th percentile must be estimated.

2. The amount of comfort this gives us about the risk margin will depend on how much of the outstanding claims relates to payments to be made in the next transaction period and how confident we are about the payment pattern. 

3. Some of the more common stochastic models used for assessing risk margins are:

(i) Chain ladder bootstrap

(ii) Other non-parametric bootstraps based on different models

(iii) Mack’s model

(iv) Generalised linear models

(V) Adaptive generalised linear models

Practical Considerations for IBNR Issues

1. Excess or shock claims, especially their timing, number and amount, are  examples of real world disruptions to a health actuary’s IBNR calculations. There are other outside Influences on Health Claim Reserves and Patterns

2. Shock claims have a material impact on completion factors produced by development IBNR calculation methods. Often the adjudication time for these excess claims is longer; thus, when they are paid, they can lower all paid lag month’s completion factors, raising the overall claim reserve produced. 

3. By incorporating the excess claim’s impact (e.g., lower completion factors), one is essentially providing an ongoing reserve for a similarly expected excess claim. Alternatively, in the rare case that the large excess claim is paid much faster than other claims, the resulting completion factors will be increased, thus lowering reserves, a likely unwanted result.