Prudential Requirements

Manalur Sandilya

Consulting Actuary

Outline

• ICP’s 18 through 23

• Interlinked by the same theme

• Interpretation of Prudent – Prudent Expert

• Non-Life Insurance Focus

• Ideas applicable to Life Insurance situations as well

Background

• Change in the Insurance Environment brought by movement from Tariff regime to a non-tariff regime

• Actuarial Cycle -- a shorter version

• Liability Valuation Standards

• Suggested/Guidance/Approval

• Available Methods

Valuation Methodology

• Paid Development

• Weighted Average or BF

• Incurred Development and BF

• Frequency/Severity methods

• Data Issues

• Objective -- Robust Estimate

Ratemaking Issues

• Basic Premise -- Properly priced and marketed product will not create “reserving” issues

• Where to begin -- given current conditions, start with reserving

• A forward looking analysis

• Data issues

Rate Adequacy

• Actuarial cycle

• Evaluate impact of ratemaking

• Rate Adequacy Analysis

• Leading to IBNR studies

Other Issues

• Handling of Reinsurance

• Appropriate Methods

• Net Analysis and Gross Analysis

• Testing of Analytical results

• Applications to ECR and FCR

• Future?