Actuaries in General Insurancebhanuuuuuuuuuuuuu

ACTUARIES IN GENERAL INSURANCE
CHAPTER-1 INTRODUCTION
1
1.1 Meaning of Actuary
Actuarial involvement in general insurance has grown significantly in recent years.

Nowadays, general insurance actuaries might help insurance companies estimate the
reserves they require for future claims as well as identify the other management
information they need.
Actuaries will also work on rating insurance products in areas such as motor and
household insurance where large volumes of data exist. In other fields, they will advise
building societies on the capital requirements for their own insurance companies, and
advise reinsurance companies on their rates for 'excess of loss reinsurance.
An actuary deals with the business of insurance and is responsible for many areas under
the broad category of insurance. The actuary is an individual who will analyze important
data such as mortality, sickness, injury and disability rates and use that information to aid
those involved with insurance. An actuary is responsible for collecting the data to
forecast future risks and see how these predictions will affect various aspects of
insurance.
2
1.2 Importance Of Actuary In General Insurance
General Insurance actuaries provide expertise in 3 main areas
Reserving - actuaries apply statistical techniques to assess the likely outcome of general
insurance liabilities and the provisions that are needed for reporting purposes
Pricing - actuaries assesses the frequency and average amount of claims to estimate
premiums
Capital modelling - actuaries projects both the liability and assets of insurers to assess
solvency and future capital needs.
General insurance, such as motor and household insurance policies, provide payments to
cover loses arising from a particular financial event. General insurance typically includes
any insurance that is not determined to be life insurance. General insurance is is called
property and casualty insurance in the United States of America and non-life insurance
in most of Europe.
General Insurance is broadly divided into two areas: personal lines and commercial lines
Personal lines
Products designed to be sold in large quantities, such as motor insurance, household

insurance, pet insurance and creditor insurance
Commercial lines
Products which are usually designed for relatively large legal entities. These include
workers' compensation (employers liability), public liability, product liability,
commercial fleet and other general insurance products. There are many companies that
supply comprehensive commercial insurance packages for a wide range of different
industries, including shops, restaurants and hotels.
3
The General Insurance Board actively influences the environment in which General
Insurance actuaries practice
The General Insurance Board is a member-led Board of senior volunteer actuaries that
advises the Institute and Faculty of Actuaries (IFoA) on important General Insurance
issues. The General Insurance Board sets key objectives each year and has oversight of
three subcommittees: General Insurance Education and Continued Professional
Development Committee (GI ECPD)General Insurance Research Organising
Committee (GIRO) General Insurance Reserving Oversight Committee (GI ROC).
With 30% of the general insurance membership living and working outside of the United
Kingdom, across 70 different countries, the General Insurance Board has focussed its
attention toward how best to deliver support to fragmented overseas members,
developing an understanding of their needs and geographic location whilst increasing
measurable ECPD outputs aligned to the international GI Community.
4
CHAPTER-2
ROLES & RESPONSIBITIES
5
2.1 Roles Of Actuary
The daily job duties which an actuary must complete are quite vast and varied. This
individual wears many hats and must be adept with completing various tasks on a daily
basis. Although many individuals may be unaware of the responsibilities which an
actuary takes on in their job role, the position of actuary is one of an important nature.
Establishing estimates for unpaid claim liabilities, unearned premium and other
estimated liabilities (technical reserves) and certifications
Insurance product premium pricing
Surrender value calculations
Management of pooled savings products, such as with profits
Reinsurance program design and management
Underwriting policy definitions
Life groups underwriting
Solvency calculations and reports
Internal modeling, including stochastic asset-liability modeling
Strategic asset management and capital management
Value management (embedded value)
Corporate strategy and planning and control management, including mergers and
Acquisitions
Investment
Underwriting profits continue to elude most insurers
Investment is not incidental to the business
6
Insurance business brings in the cash investment income brings in the profit
AA is a member of the investment committee where his views are taken very seriously
Actuary can help the Management withAsset Liability Management (ALM)
Provide inputs on tactical and strategic asset allocation
Independent analysis of the investment teams performance
Inputs on what can be done better is expected to be provided to the
management/board
Pricing
Adequacy of pricing
Pricing for new products
Experience monitoring of existing products
Identifying unprofitable segments
Suggest the pricing action that needs to be taken
Develop models for pricing complex products when available data is
sparse
Pricing has gone beyond simple frequency severity analysis with methods like
GLM gaining prominence
Helping underwriters with pricing of commercial lines
Unearth patterns from raw data which can help in improving rating factors
Reserving
Calculation of IBNR reserves
Auditors rely on actuarys estimate
7
Direct bearing on
Solvency
Profitability
Balance the interests of various stakeholders
Regulator
Impact on solvency
Shareholders .
Impact on profits
Income Tax
Impact on profits and hence on taxes
Customers
Impact on product prices
Himself
Impact on his career
Risk and Reinsurance
Actuary has a good understanding of the companys balance sheet:
Ability of the company to bear a particular risk what to bear and how much
to cede
Commenting on adequacy of premium
Quantifying impact on balance sheet before accepting a risk
Assess the reinsurance programme of the company and point out areas where
he is not comfortable
Provide inputs in setting up the reinsurance policy for each year
8
Apprise the management/board in case he finds the impact on net account of
certain risks on the higher side and suggest reinsurance options
Interpret reports on catastrophe modelling earthquake, cyclone etc.
Exposure analysis
Reinsurance issue mainly arises in commercial lines where underwriters
role is much more than the actuary but actuarys inputs remain valuable
9
Other Roles
More actuarial opinions can be required in more jurisdictions for loss reserves,
unearned premium reserves and other estimated liabilities
Provide risk management and governance in line with new solvency regulations
Expand the role of risk assessment during mergers and acquisitions and other
transactions
Expand existing roles or develop new roles where the actuary works with auditors
and performs the role of 'reviewing actuary'
10
2.2 Responsibilities
An actuary is a statistician who is in charge of evaluating various types of risks. Most

actuaries are employed by insurance companies, which use their expertise to set the
terms, conditions and premium rates for their insurance policies. They are also hired by
pension funds and various private companies to detect risks and help design procedures
that can help mitigate risk. And while the actuaries' responsibilities vary depending on
who hired them, and what kind of data they are working with, the basics tend to remain
the same.
Actuaries and the Importance of Risk Evaluation
When an insurance company sells off an insurance policy, it operates under the
assumption that the person who bought bought will not require the coverage. There are
only so many times insurance companies can pay claims before those payments start
costing them more money. In order to avoid pay-outs, insurance companies need
someone to analyse what kind of risks their potential beneficiaries will be facing and
calculate whether or not selling insurance to them is worth the risk. This is where the
actuaries come in.
The actuary will use their extensive knowledge of statistics, finance and economics to
analyse the data. They serve similar purpose when they work for pension funds. Private
companies used them to evaluate risks involved in implementing their business strategies
in hopes that they will be to avoid putting their money in something that will ultimately
backfire and cost them far more than it's worth. The responsibilities include the
compiling and reviewing statistical data, using that data to suggest policy guidelines for
their employers, providing expert testimony at trials and legislative hearings and coming
up with new and improved ways to consider risk.
Compiling and Reviewing Statistical Data
11
This is the first and the most important responsibility of the actuary. Actuaries gather data
on mortality, sickness, accidents, disability and retirement within their community, as
well as any other data that may be relevant to their employer. They plug those variables
into advanced statistical models to calculate how those variables would affect the
insurance beneficiaries in the future. The data that is produced is fairly reliable.
Advising on Company Policies
Another responsibility is contract review. An actuary will review contracts, insurance

plans, annuity plans, pension plans and policies. They look to see if those policies take
the risks they calculated into account and craft guidelines that would allow their
employers to better adapt to those risks.
Providing Expert
The actuaries are sometimes asked to provide testimony in lawsuits that revolve around
insurance or risk in general. Sometimes, they are asked to testify on the behalf of their
employees, but they are also asked to act as expert witnesses. They may also be asked to
testify in similar capacity when state and federal legislatures are trying to create laws that
have anything to do with insurance companies.
Devising New Methods of Risk Analysis
While actuaries often rely on statistical models devised by other actuaries or

mathematicians in general, they are sometimes asked to come up with new statistical
models in order to evaluate risks for new insurance policies, or modify existing models to
account for circumstances that did not previously exist. They may also be asked to make
existing models more exact and more efficient.
12
2.3 Duties
There are a variety of specific duties which an actuary must carry out on a daily basis.
The first duty which an actuary must undertake in their job role is to review a variety of
documents. These documents relate to statistical information, insurance plans, annuity
plans, pension plans, contracts and company policies. The overall goal in reviewing these
various document is to construct guidelines for which the companies can follow with
their customers and employees.
Once the actuary has reviewed all of the pertinent documents, the individual must then
construct concise tables evidencing the results of the intense document review. The tables
will diagram the statistical evidence as well as highlight the recommended route to
pursue with regard to disbursements, premiums and retirement funds.
An additional specific duty of an actuary is to determine company policy and explain

such policy and its aspects to those who will benefit from it. The actuary may also work
on the policy so that it adequately works to benefit those affected by the policy.
An actuary may also do consulting work and help various companies with their statistical
needs and company policy construction. One who is an actuary may work for a specific
corporation or many different companies and corporations.
Actuaries may also be asked to testify as expert witnesses in various forms of litigation.
Their testimony most often relates to the lifetime earnings an individual would have seen
based on a variety of factors.
One who fulfills the role of an actuary may also have to testify before public agencies
with regard to new or revised legislation affecting the companies and corporations which
it works for. This frequently occurs when a new law is about to be passed or the company
wishes a particular piece of legislation to become law.
13
The actuary is also the go to individual for any questions relating to their job
responsibilities asked by the customers of the company. If the questions are best
answered by the actuary, then he/she will do so in order to present straightforward
information to the public.
An actuary must also develop mathematical ideas and formulas so that the proper data
can be assessed. The actuary must use his/her mathematical abilities to format equations
which will aid in the resolution of an issue.
14
2.4 Traits Which Actuaries Should Possess
There are many beneficial traits which an actuary should possess. First and foremost, an
actuary needs to possess wonderful mathematical skills. Since they will be dealing a great
deal with statistical equations and data, having such mathematical skills will help them to
excel in their job responsibilities.
Good analytical skills are another important trait which an actuary should possess as it
will help them in their job role. As they will need to analyse a variety of documents,
having
analytical skills which are more than adequate will greatly benefit them in the long run.
An actuary is an individual who should possess good public speaking skills as well. In
their daily job duties, not only will they need to analyse documents and data but they will
also have to report such data results to company officials and members of the public.
Therefore, in order to best get their opinions and conclusions across in a straightforward,
easy to understand manner, good public speaking skills should be a prerequisite to taking
on the role of actuary.
Creativity is something which actuaries should possess. From time to time, they will need
to aid company officials in the drafting of company policy and make changes to the
policy. With a little bit of creativity, an actuary will be able to take the documentation and
put such a spin on it that it is formed into a proper and valid policy.
One who is an actuary should also have wonderful research skills. Since many of the
documents that they need to analyse will not just pop into their laps, it is important that
actuaries can do good research and find out what they need to know with regard to
statistics and pertinent documents in an efficient and expedient manner.
15
An actuary should also have good working computer skills. Since much of their work
will involve computers, it is important that the actuary not only be familiar with
computers but know how to makeover around with them as well.
Comprehension skills are also a necessary component for all actuaries to possess. The
actuary is an individual who in their job role will need to analyse and interpret often
CHAPTER-3 QUALIFICATION
16
3.1 Education For Actuaries
While having a degree and a strong background in math is paramount, insurance

actuaries may find the exams that they need to pass to be the most challenging and time
consuming aspect of their educational requirements. Similar to an attorney, an insurance
actuary needs to pass several exams in order to advance in their career. Through these
exams, many of which can be taken while already employed, they are able to achieve
different levels of professional designation.
Insurance actuaries must be licensed by one of two professional society sponsor

programs. In doing so, they can achieve full professional status within their chosen
specialty of health and life insurance or property and casualty insurance. The Society of
Actuaries (SOA) certifies actuaries in health and life insurance, as well as finance,
investment and retirement systems . The Casualty Actuarial Society (CAS) licenses
actuaries in property and casualty insurance. The CAS examinations cover subjects such
as workers compensation, personal injury liability and home and automobile insurance .
By passing a number of examinations and participating in continuing education

programs, an actuary can achieve the professional designation of an Associate from either
professional society. This typically takes 4-8 years.
The highest professional designation is known as the Fellowship level. This can be
achieved through either professional society by completing more continuing education
and passing more exams. This process takes an additional 2-3 year for an Associate to
complete.
Insurance actuaries develop policies related to the potential risks that a company or
person might face, such as death, property loss, and disability. They need a bachelor's
17
degree with a strong focus on math as well as professional certification obtained by

passing several tough exams.
3.2 Essential Information
Insurance actuaries create policies for insurance companies. These policies deal with the
potential for risk and the possible cost of liability in events like property loss, death,
injury, sickness or disability. They may also deal with other financial matters for their
companies.
Required education Bachelor's degree (usually with a strong

background in math)
Other Requirements certification
Projected job growth 18% for all actuaries
Average salary $110560 annually
18
3.3 Job Description
Actuaries that work in the insurance industry generally specialize in either life and health
insurance or property and casualty insurance. The integral role that an actuary has in
insurance companies stems from their risk assessment research. This research helps them
forecast how likely it is for certain risk events to occur and how these events will impact
their company with potential loss.
For example, an insurance actuary with a property and casualty specialization might
calculate how many claims the company can expect to have as a result of car accidents.
They must weigh an insured person's vehicle type, age, sex and driving history to devise
a premium that is competitive with other insurance companies. They have to make sure
that the premium covers all the possible expenses arising from a potential claim, while
still making money for the company.
Insurance actuaries typically work 40-hour weeks in an office environment. In the case of
an actuary working as a consultant, travel may be required, which could result in longer
hours. As of May 2015, all actuaries earned an average salary of $110,560 per year,
according to data compiled by the U.S. Bureau of Labor Statistics (BLS). For actuaries
employed in the insurance carrier industry, the average annual salary was reported as
$105,880 in May 2015. The BLS has projected a 18% employment growth rate for
actuaries between the years of 2014 and 2024.
19
CHAPTER - 4 AON
(INSTITUTION FOR ACTUARIES)
20
4.1 About AON

WhAt do we do?
You might not be too familiar with our name, but Aon is an organisation of incredible
size and scope. Our business is professional services; we are the worlds #1 insurance
broker, the #1 provider of reinsurance and a market leader in human capital consulting.
Worldwide, Aon employs 36,000 people who use their specialist knowledge and
industry expertise to help our clients grow. Across the UK, we have 5,000 employees in
30 offices.
Who can join our Graduate Programme?
Our UK Graduate Programme has been designed to identify and develop the future stars
of our business. We look for a minimum 2:1 degree or equivalent, plus numeracy,
analytical abilities and strong customer service skills. Opportunities exist in five
different Streams whichever you join, you can look forward to challenges and rewards
in equal measure.
When can you expect real responsibility?
Youre eager to show us what you can do and were keen to find out. We give our
graduates responsibility far sooner than many other organisations. Our training and
networking opportunities will help you understand our business and equip you with the
business knowledge and professional skills to succeed. Youll very quickly become a
technical specialist in your area, meeting clients to advise them on our market-leading
products. We also offer highly attractive reward packages for all our roles.
21
4.2 Actuarial General Insurance

As a world leader in the dynamic arena of General Insurance and Risk Management,
Aon develops scenarios that identify and assess possible events that lead to extreme loss.
We work across all financial markets, helping insurance companies to optimise the
financing of their capital at risk or enabling mortgage lenders to manage their portfolios
against different market conditions. This means we can offer unparalleled opportunities
for graduates to gain broad experience of general insurance actuarial consulting. Youll
help deliver a wide range of actuarial and analytical solutions to global clients, quickly
gaining the expertise to manage your own projects. As well as supporting your study
towards qualification as a Fellow of the Institute of Actuaries, well give you the
training to carry out actuarial analysis, innovate with trends in actuarial theory/practice
and provide analytical support. To join us as an Actuarial Analyst, you will need a 2:1
degree or equivalent in a numerate discipline, strong analytical skills and the drive to
deliver excellent work to our clients.
Aon non-life actuarial services offer risk managers and short term insurers the means to
optimize their risk management, manage their business results and prepare for legislation
and accounting standard changes.
Through the years, an organization's risk and policyholder profile may change, perhaps
even significantly as demonstrated during and in the aftermath of the global economic
recession. The cyclical nature of insurance markets means that premiums can increase
22
sharply or coverage can even be withdrawn unexpectedly, having a dramatic impact on

the capital needed to support the business. Our non-life actuarial services can help short-
term insurers and risk managers establish an optimal response to either positive or
negative shifts in the business, accounting or regulatory environment.
4.3 Speciality
Key focus areas
Effective risk managementOptimize reinsurance programsAdd insight into your

underwriting results and the capital needed to support itAccurately estimate technical
liabilitiesEstimate capital needed to support your business in the next 5 yearsPrepare for
the Solvency Assessment and Management (SAM) regimeAnticipate imminent
accounting standard changesAccurately price your policies, taking market forces into
account
The benefits include:
Facilitating the alignment of risk management and capital requirements Keeps in line
with international developments such as Solvency II, SAM and IFRS4 phase 2Optimizes
the capital needed to support the business risk, reinsurance program and underwriting
results Provides realistic estimates of the nonlife technical reserves Assess an optimal
investment strategy using asset/liability modeling techniques Eliminates guess work from
the pricing process Key product capabilities Statutory valuations Underwriting and
capital modeling using the Remetrica world-class modeling too Developing a response to
and preparing for SAM Asset/liability modeling High-level reinsurance review and full
detailed reinsurance assessment Risk management review Premium rating exercises
23
CHAPTER-5 CURRENT ISSUES

FACED BY ACTUARIES
24
Issues faced
Many of the issues currently facing actuaries working in general insurance are the same
as those faced by most other disciplines within the profession the impact of new
distribution channels and mergers and acquisitions. There have been many recent legal
and legislative changes, and there is the prospect of more to come. A new regulatory
regime is in the process of being introduced. Margins vary greatly between different
product areas, and there is an increasing need to demonstrate that shareholder value is
being created and that capital is being used in the most efficient way. All of the above
topics will be being addressed at the 27th General Insurance Convention being held in
Birmingham at the end of October. Around 400 members of the actuarial profession will
be gathering to discuss the work that has been done over the past year.
Channels of distribution
The distribution of products is undergoing a massive change. It is unusual to see a

commercial break on television that does not include some advertisement or other
relating to the Internet, and over the past few months an increasing number of these have
been for insurance services. Opinion differs massively as to how effective this channel of
distribution will be. However, increasing numbers of high street retailers and utility
companies are marketing general insurance products under their own brands. At the same
time, the continuing merger and acquisition process is reducing the choice of insurance
providers available.
Public interest issues
25
Over the past two years there has also been a great deal of debate about the role of the
actuarial profession in considering public interest issues. A position statement on making
general insurance buyers better informed is available on the professions website, and
there will be many further discussions around how well current insurance products meet
consumer needs, whether they are fairly priced, and the effectiveness (and inherent risks)
of different methods of remunerating insurance sellers. This will lead to more position
statements being developed watch the website for details!
Taxation
One of the most recent legislative changes deals with taxation. Within the budget,
changes were announced to the way that profits will be taxed, the intention being that
discounted rather than undiscounted reserves should be used for assessing tax due. There
is still a great deal of debate about how the rules will work in practice, and also what
effect this will have on the industry as a whole. From a regulatory point of view, the
development of the Financial Services Authority will begin to introduce changes, and the
introduction of the General Insurance Standards Council is also likely to have an impact,
the extent of which is again open to debate. Representatives from both organisations will
be at the conference and will be leading discussions about recent and planned
developments.
Compensation
General insurance is massively affected by legal decisions, both on the amount of

compensation that is appropriate in various circumstances and on how such payments
should be structured. There have been significant developments in both these areas over
the past year. This has a heavy impact on both reserving and pricing. The profession
clearly also has an important role to play in debates about the most appropriate method of
compensating individuals for injuries suffered, both in determining the size of lump-sum
payments, and in structuring settlements in other appropriate ways.
Effective business strategy
26
It is obviously important to select lines of business where adequate levels of profit can be
made. Methods for determining the shareholder value being created by different products
are developing all the time. Efficient capital allocation is a topic that continues to
increase in importance. A key element of determining an effective business strategy is to
try and work out the optimum way of managing business through the insurance cycle. To
help with this, Understanding the insurance/reinsurance cycle was the subject for the
Brian Hey prize, and several papers on the subject have been entered.
Two product lines that have performed relatively poorly in the past few years have been
employers liability and the aviation market. Papers will be presented at the conference
looking in some detail at what have been the main changes in these lines, and also giving
consideration to how things will develop in future.
Financial strength
A lot of work has been done in the past year on determining the financial strength of
insurance companies and looking into the reasons why some insurers have failed in the
past, something that the failure of Drake this year has thrown into sharper focus. This
27
also ties in with work being done on financial condition reporting which will result in a
sessional paper in March 2001.
The conference in past years has been an excellent forum for discussing such issues and
developing the knowledge of the profession, and I hope that many of the topics above
will be discussed in greater depth in this magazine. Next years conference will also need
volunteers to do research, so if you are interested in volunteering, please let me know.
CHAPTER-6 IRDA GUIDELINES
28
IRDA
Draft guidelines for Issuance of Capital by General Insurance Companies
The Insurance Regulatory and Development Authority (IRDA) has released draft
guidelines of Issuance of Capital by General Insurance Companies Regulations, 2012.
These Regulations shall be applicable to divestment of the excess shareholding by the
promoters of the applicant company and/or to otherwise raise funds under the ICDR
Regulations (SEBI - Issue of Capital and Disclosure Requirements Regulations, 2009).
With these regulations, IRDA has introduced a layer of approval for the general insurance
companies before approaching The Securities and Exchange Board of India (SEBI). The
draft guidelines clearly state, No general insurance company shall approach the SEBI
for public issue of shares and for any subsequent issue, by whatsoever name called, under
the ICDR Regulations without the specific previous written approval of the Authority
accorded in the manner prescribed herein.
Issuance and allotment of capital by an insurance company shall only be in the form of
fully paid up equity shares and no other form.
Criteria for consideration for approval
IRDA shall generally consider the applicant companys overall financial position; its
regulatory record; the proposal for issue/offer of capital; the capital structure post
issue/offer of capital; and the purposes to which the share capital proposed to be raised
will be applied. The following parameters will be considered for approval: the period for
which the applicant has been in the general insurance business; the history of compliance
with the regulatory requirements by the applicant company; the maintenance of the
prescribed regulatory solvency margin as at the end of the preceding six quarters
29
commencing from the quarter immediately prior to the date of filing the application;
compliance with the disclosure requirements mandated under IRDA Circular No.
IRDA/F&I/CIR/F&A/012/01/2010 dated 28th January, 2010 as amended and modified
from time to time; compliance with the Corporate Governance Guidelines; its record of
policyholder protection; and the Embedded Value of the applicant company. Such
Embedded Value Report shall be prepared by an independent Actuarial Expert and peer
reviewed by another independent Actuary and shall be prepared in the manner prescribed
by the Actuarial Practice Standard issued by the Institute of Actuaries of India or in
compliance with the prescriptions laid down by the Authority in this regard. The
Authority generally expects the Embedded Value to be two times the paid up equity
capital (the paid up capital shall be inclusive of the share premium).
The approval granted by the Authority shall have a validity period of one year from the
date of issue of the approval letter, within which the applicant company shall file the
Draft Red Herring Prospectus (DRHP) with SEBI under the ICDR Regulations.
30
RECENT NEWS
Insurance industry most threatened by disruptive change
CEOs in the insurance industry are more concerned about the combined threats to their
companies growth prospects than leaders in any other sector, according to findings from
PricewaterhouseCoopers (PwC) CEO Survey.
14 FEB 2017
Concerns about disruptive change have continued to rise
They expect to be hugely impacted by disruptive technological, economic, social, and

political changes in the coming years, with business chiefs in entertainment, banking and
healthcare less concerned.
Over-regulation was found to be the number one worry for 95% of insurance bosses
worldwide, with more than half believing it is becoming harder to compete in an open
global marketplace as countries adopt more protectionist policies.
31
PWC global insurance leader, Stephen OHearn, said: Insurance CEOs are acutely
aware of the disruption and change facing their industry, the transformational impact of
which is now evident.
Concerns over regulation, the pace of technological change, shifting customer

behaviour, and competition from new market entrants have continued to rise from their
already high levels.
When the impact is put together, no other sector is facing as much disruption in these
four areas.
The top five disrupted sectors, and the percentage of CEOs extremely concerned about
the relevant threats are shown below:
Other threats identified in the survey include economic growth (84% of CEOs), social
instability (75%), geopolitical uncertainty (74%), and the future of the Eurozone (72%).
However, despite soft premium rates, low interest rates, and subdued economic growth
contributing to ongoing cost pressures, 81% of CEOs are confident that their companies
can achieve revenue growth this year.
The optimism shown by insurance CEOs for continued growth shows how the speed of
technological change can be turned into a great opportunity, PwC UK insurance leader,
Jim Bichard, said.
32
As customers demand more interactive and transparent interactions with their insurers,
partnering with start-ups to learn new ways of working enables the sector to tap into a
wealth of different experiences.
Insurers can reap the benefits of being proactive in disrupting themselves as a way of
combating perceived external threats to growth such as regulation.
CONCLUSION
An actuary is an individual who has many duties and responsibilities concomitant to their
position. If one in this job role has excellent analytical, comprehension, mathematical and
public speaking skills, they will most likely be individuals who excel at their job and
33
produce the highest quality work product possible. If one has all of these aforementioned
skills, the position of actuary may be the perfect one to fill.
Actuary has a good understanding of the companys balance sheet. Ability of the
company to bear a particular risk what to bear and how much
to cede
Commenting on adequacy of premium

Quantifying impact on balance sheet before accepting a risk
Assess the reinsurance programme of the company and point out areas where
he is not comfortable
Provide inputs in setting up the reinsurance policy for each year
Apprise the management/board in case he finds the impact on net account of
certain risks on the higher side and suggest reinsurance options
Interpret reports on catastrophe modelling earthquake, cyclone etc.
Exposure analysis
Reinsurance issue mainly arises in commercial lines where underwriters
Role is much more than the actuary but actuarys inputs remain valuable
BIBLIOGRAPHY
While working on this project I took help from several books, which are as
follows:
Text-books
Impact of Information Technology ,Mohit Publication

Design ,Development& Implementation Of information System
34
Newspapers & Magazines
Economic Times
Business Times
The Actuary magazine
WEBLIOGRAPHY
Various websites were also visited
www.rbi.org.in
www.insuranceIndia.com
www.thehindubusiness.com
35

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What are the three main areas that general insurance actuaries provide expertise in?

What are the three main areas that general insurance actuaries provide expertise in?

What are the two broad areas that general insurance is divided into?

What are the two broad areas that general insurance is divided into?

ACTUARIES IN GENERAL INSURANCE

1.1 Meaning of Actuary

Actuarial involvement in general insurance has grown significantly in recent years.

1.2 Importance Of Actuary In General Insurance

General Insurance actuaries provide expertise in 3 main areas

Products designed to be sold in large quantities, such as motor insurance, household

2.1 Roles Of Actuary

estimated liabilities (technical reserves) and certifications

Insurance product premium pricing

Surrender value calculations

Management of pooled savings products, such as with profits

Reinsurance program design and management

Underwriting policy definitions

Life groups underwriting

Solvency calculations and reports

Internal modeling, including stochastic asset-liability modeling

Strategic asset management and capital management

Value management (embedded value)

Underwriting profits continue to elude most insurers

Investment is not incidental to the business

Actuary can help the Management withAsset Liability Management (ALM)

Provide inputs on tactical and strategic asset allocation

Independent analysis of the investment teams performance

Inputs on what can be done better is expected to be provided to the

Pricing for new products

Experience monitoring of existing products

Identifying unprofitable segments

Suggest the pricing action that needs to be taken

Develop models for pricing complex products when available data is

GLM gaining prominence

Helping underwriters with pricing of commercial lines

Calculation of IBNR reserves

Auditors rely on actuarys estimate

Balance the interests of various stakeholders

Impact on profits and hence on taxes

Impact on product prices

Impact on his career

Risk and Reinsurance

Actuary has a good understanding of the companys balance sheet:

Commenting on adequacy of premium

Quantifying impact on balance sheet before accepting a risk

Provide inputs in setting up the reinsurance policy for each year

Apprise the management/board in case he finds the impact on net account of

certain risks on the higher side and suggest reinsurance options

Interpret reports on catastrophe modelling earthquake, cyclone etc.

Reinsurance issue mainly arises in commercial lines where underwriters

unearned premium reserves and other estimated liabilities

and performs the role of 'reviewing actuary'

An actuary is a statistician who is in charge of evaluating various types of risks. Most

Actuaries and the Importance of Risk Evaluation

Compiling and Reviewing Statistical Data

Advising on Company Policies

Another responsibility is contract review. An actuary will review contracts, insurance

Devising New Methods of Risk Analysis

While actuaries often rely on statistical models devised by other actuaries or