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Rate Monitoring

Join the September 15th seminar with Paul Lucas to understand why monitoring rate movements is crucial, learn how to monitor rate movements effectively, and explore the key issues and suggestions in pricing. Discover why it is important for management information, investor communication, regulatory requirements, reserving analysis, and meeting reinsurers' expectations. Evaluate the market's response and gain insights on monitoring rate movements through comparison, metrics, and worked examples. Address issues such as quantifying the unquantifiable, group-wide consistency, understanding the market, and managing new business and portfolio churn. Get tips on risk assessment at the risk or portfolio level, loss-sensitive features, and treating inflation. Consider incorporating rate monitoring alongside other metrics, embedding it in business strategies, conducting workshops with underwriters, performing audits, and benchmarking with industry standards.

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Rate Monitoring

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Presentation Transcript

  1. Rate Monitoring London CARe Seminar: Pricing and Issues in Today’s Market September 15th Paul Lucas

  2. Agenda • Why • How - examples • Issues • Suggestions

  3. Why monitor rate movements • Management Information • Investor communication • Regulatory requirement • Reserving analysis • Reinsurers want to know Where are we in the cycle relative to in the past – key for portfolio management decisions / reserving

  4. US GL Rates Is the market going to respond?

  5. How to monitor rate movements • Compare what you’re charging this year to last year, adjusting for any changes in exposure & contract terms • Compare adequacy of rates charged against technical premium, year on year • Metrics only meaningful when used together

  6. Worked Example

  7. Worked Example

  8. Issues • Quantifying the unquantifiable – expert judgments • Group wide consistency – clear guidelines • Understanding – training & reviews • New business & portfolio churn – adequacy – why are we winning it • Claims driven increases - adequacy

  9. Issues • Risk by risk or portfolio level – homogenous risks vs big ticket • Loss sensitive features – swing – worth the detailed calculations? • Underestimate absolute size of increases and decreases – see graph – terms and conditions? • Lost business – affect on portfolio performance • Treatment of inflation – in or out?

  10. Be wary with On level LR’s Understate magnitude of rate increases and decreases – leads to on level soft market years looking worse than on level hard market years – another force is at play

  11. Suggestions • Consider alongside other metrics – technical price, priced LR, line size profile • Embed in business from top down • Workshops with underwriters • Audits and checks on numbers • Reserving new years more than on leveling prior years experience • Benchmark to industry for sense checks

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