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CAE Meeting – Zurich April 2004

CAE Meeting – Zurich April 2004. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. Loss ratio Analysis: Balance between stability and responsiveness.

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CAE Meeting – Zurich April 2004

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  1. CAE Meeting – ZurichApril 2004

  2. What’s your expectation?

  3. What’s your expectation?

  4. What’s your expectation?

  5. What’s your expectation?

  6. What’s your expectation?

  7. What’s your expectation?

  8. Loss ratio Analysis:Balance between stability and responsiveness

  9. Cumulative Effect of Rate ChangesSimple Math; full appreciation of business effect is another thing

  10. Long-term, which is more stable, loss trend or price movements?

  11. Is this all the risk? • NO: • The Tail can bump up loss ratios of ALL accident years • Future loss trends might change • Quality of the book; accuracy of Price Monitoring; Terms and conditions • And don’t forget Excess Loss

  12. Price Movements: Method • Process: • Focus on renewed accounts • Price comparisons per account level are calculated after consideration of movements in: premium, exposure, share, and policy/program structure (deductibles, attachment points and limits). • Cases of extreme movement in coverage terms are excluded to avoid undue bias. • Cases resulting in extreme case movements are reviewed by pricing actuaries/underwriters to ensure data quality. • Aggregate results to relevant market level.

  13. Price Movements: Limitations • Price Movements should factor additional factors before being applied to loss ratios: • multi-year accounts • Quality of business lost; quality And price adequacy of new business • Loss trends • Change in terms and conditions • Reinsurance cost

  14. Thank You

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