CAE Meeting – Zurich April 2004

17-Nov What’s your expectation?

17-Nov What’s your expectation?

17-Nov What’s your expectation?

17-Nov What’s your expectation?

17-Nov What’s your expectation?

17-Nov What’s your expectation?

17-Nov Loss ratio Analysis: Balance between stability and responsiveness

17-Nov Cumulative Effect of Rate Changes Simple Math; full appreciation of business effect is another thing

17-Nov Long-term, which is more stable, loss trend or price movements?

17-Nov 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

17-Nov 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.

17-Nov 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

Thank You