Asset Management Portfolio Diversification

BACKGROUND

Here is an article highlighting the need for life insurers to “broaden their horizons” due to low-yield returns in existing investment strategies.

It recommended non-traditional investments and different assets to consider alternatives in infrastructure, real estate-backed loans, asset-backed securities and unsecured assets such as high yield bonds.

This post will outline the few risk and opportunities of the non-traditional assets identified.

Link to article as follow:-

http://www.theactuary.com/news/2015/01/life-insurers-told-non-traditional-assets-critical-to-maintaining-profitability/

Claims Management Practices

BACKGROUND
Here are two articles highlighting practices in the insurance claims process. 

The first article listed the findings by the Financial Conducts Authority (FCA) on the handling of SMEs' insurance claims. Link as follow:

http://www.actuarialpost.co.uk/article/fca-review-insurance-claims-service-and-sme----039s-expectations-7900.htm

The second article reported the concerns by government task forces with the industry practices. Link as follow:

http://www.theactuary.com/news/2015/03/claims-management-companies-are-a-concern-for-insurance-task-force/

Innovation in General Insurance Underwriting

BACKGROUND An article discussing and providing points for insurers to innovate in view of stiff competitions, record capacity levels and reduced premium income. Link to article as follow: http://www.insurancebusinessonline.com.au/news/underwriters-urged-to-innovate-in-order-to-survive-in-major-industry-199226.aspx

The article  highlighted a number of areas where underwriters could offer more flexible coverage or new insurance products, they are: 1. Repackaging of onshore terrorism cover into property programmes. 2. Deletion of cyber exclusions. 3. Increased sub-limits for contingent business interruption (CBI) or supply chain risks. 4. A seamless product for onshore projects covering handover from construction to operating phases 5. Increased flexibility of aggregate limits and retentions for natural catastrophe risks.

Generalized Linear Model For Life Insurance

PURPOSE

Some traditional one-way  pricing methods do not factor in effects of correlations in the data leading to mispricing of relevant risks.

Not to be confused with General Linear Models, Generalized Linear Models utilizes a Maximum Likelihood estimation method and performs better with larger samples.

Banking Innovations - Part 5 - Regulations, Landscape, Gaps, and Risk Management

This post covers Regulations, Landscape, Gaps, and Risk Management in the fintech industry.

Banking Innovations - Part 4 - Australia and Banking Initiatives

This post covers Australia with an analysis of their Fintech companies and initiatives by banks.

Banking Innovations - Part 3 - Asia and Africa

This post covers Asia and Africa with an analysis of their Fintech companies.

Banking Innovations - Part 2 - USA and Europe

This post covers USA and Europe with an analysis of their Fintech companies.

Banking Innovations - Part 1 - White Paper on Trends and Purpose

1. Banking Innovation is a global growth‐sector. There are three types of banking innovations (on top of the regular IT investments done by banks: (1) In‐bank FinTech innovations – also known as FinServ innovations; (2) Neo‐Banks as part of the FinTech community; and, (3) Non‐Banking FinTech companies.

2. A white paper on Banking Reports by MarketResearch highlight significant qualitative and quantitative differences between five continents examined.

White Paper on Asia Insurance Market Report 2014

1. Asia continues to be a region of contradictions and opposing dynamics, with markets that are extremely developed, markets that are truly emerging, and natural catastrophes among the most devastating anywhere on earth.

2. Insurance industry seems to be in a perpetual soft market, driven by new capital, new capacity, and fierce competition

3. A white paper by StrategicRisk discusses the Asia insurance market for 2014 and beyond.

White Paper on Kidnap and Ransom Insurance

1. Cognizant published a white paper discussing Kidnap and Ransom Insurance at an Inflection Point.

2. The number of kidnappings in the world is increasing dramatically, especially with more people traveling to less developed and politically unstable economies. According to some estimates, two people are kidnapped and held for ransom somewhere in the world every hour; each year, an estimated $1.5 billion is paid in ransom to kidnappers. While kidnap and ransom (K&R) insurance products are intended to reduce financial loss.

Life Expectency & Mortality

 LIFE EXPECTANCY AND MORTALITY

This post will provide basic Information on life expectancy and mortality (death)and how to  account for different age structures of different populations. 

South Africa's Cabinet Approves White Paper on Health Insurance

1. in December 2015 South Africa’s cabinet approved a policy white paper on a compulsory health- insurance plan.

Managing General Insurance Management Expenses

BACKGROUND

Management Expense ratios for an insurance company refers to the percentage of premium used to pay the costs of acquiring, writing and servicing insurance and reinsurance products. It can either be obtained by dividing expenses by total written premium or earned premium.

Underwriters sometimes factor in management expense ratios when pricing premiums. Here is an articles reporting regulator's concerns on increasing expense ratios and what has caused a surged in expenses which has the tendency to spiral out of control if left unchecked especially for companies on an aggressive business expansion plan. 

Insurance Financial Ratios

BACKGROUND
Below are some financial ratios relevant to the insurance management process and provides a rough idea of how management are running the companies and a possible indication of companies’ direction. We will discuss the ratios in-depth in subsequent posts. I have organized them into three main categories as follow:-

1. Underwriting Management Indicators

2. Profitability Indicators

3. Liquidity Measurement Indicators

Interest Rate Models for Insurers

BACKGROUND
This post briefly describes how interest rates affects life and general insurers and plausible models to predict future short term rates or spot rates movements. Interest rates has minimal impact on General Insurers but nevertheless is discussed for comparison purposes.

Cultivating a Healthy Insurance Market

BACKGROUND

How do we prevent undercutting in the insurance market and instead promote a healthy and growing insurance industry.

How do we avoid a price war where insurance companies hemorrhage capital in order to retain existing market share without resorting to collusion or price fixing (apart from tariffs)?

[Products] 3-in-1 Liablity Product Bundle for SME

BACKGROUND

A Melbourne underwriting agency has unveiled a product combining 3 key policies for SMEs.

The Product covers Professional Indemnity (PI), Public Liability (PL) and Management Liability (ML) and is not limited to particular occupation.

What are the benefits and impacts? Any risks & weaknesses involved?

Understanding & Managing Reinsurance Risks

I was reading an article on managing reinsurance risks and found a few points that I would like to share.

[Framework] Solvency II - Part 4 - ORSA

BACKGROUND
A continuation from previous post, this post covers ORSA’s components, processes and how each stake holders contribute.

ORSA requires a joint approach across the company as it encompasses the following:-

1. All pillars of Solvency II

2. Risk Outputs

3. Capital and Strategic Planning

4. Report to the Board on Company's Operation

5. Capital Requirements

6. Risk appetite and external environment.