Opinion: Insurance Risk Pricing vs Risk Pooling

The rapid improvement in pricing individual risks has reduced the extent to which insurance pools risk.

This removal of cross subsidies has the advantages of fairer pricing between consumers, better price signalling, and hopefully better risk mitigation by consumers and communities in response.

But this has also lead to conflict with groups that are more interested in risk pooling. An example is strata insurance for North QLD, where insurers are now pricing based on the risk, and property owners are complaining to politicians about the increased price.

However, the politicians don’t hear from the remainder of the country that no longer have to subsidise the North QLDers!

http://www.insurancecouncil.com.au/issues-submissions/issues/residential-strata-insurance

Individual claim loss reserving conditioned by case estimates

The Institute of Actuaries (UK) have just published the results of research undertaken by Greg Taylor:

Individual claim loss reserving conditioned by case estimates.
by Greg Taylor, Grainne McGuire & James Sullivan.

This paper examines various forms of individual claim model for the purpose of loss reserving, with emphasis on predictive efficiency in the sense of prediction error in the reserve. Each form of model is calibrated against a single extensive data set, and then used to generate a forecast of loss reserve and an estimate of its prediction error.

It's now on my to-do list

Introduction

This blog represents my attempt this year to surf the wave of the actuarial frontier of knowledge. In the passing years of getting out all those valuation reports, keeping up with professional developments, spending time on research has become a real challenge. So a concerted effort is required on my behalf to keep up with the inspiration of all those conferences I attend to keep up with the CPD requirements. Some actions might include actually reading those interesting papers that appear in the ASTIN Bulletin, and perhaps even getting a paper done.

Heady stuff.

Your comments and co-contributions are very welcome.