June 2017

Notes in General

By Anthony Cappelletti

Welcome to General Insurance Insights, the SOA’s biannual newsletter for those with an interest in general insurance (aka P&C or property and casualty insurance). Within this newsletter, we include several articles on current topics for general insurance actuaries. The first article is by Dave Snell. Dave’s article, “Complexity Sciences—the Tools for Tomorrow … and Even Today!” provides an interesting look at complexity science from the perspective of general insurance. The second article, “National Flood Insurance Program: Reauthorization 2017,” is my take on a trio of recent publications regarding the National Flood Insurance Program. Also in this issue, Scott Lennox, FSA, FCIA, FCAS, SOA staff fellow, updates readers on the latest from the SOA’s Research Department regarding general insurance research.

Check out the “GI PD Opportunities Update” for a listing of recent and upcoming professional development (PD) opportunities with significant GI relevant content. As for recent opportunities, the ERM Conference was held on April 20–21, 2017 at the Sheraton New Orleans in New Orleans. The ERM Conference included a significant amount of GI relevant content. While I was unable to attend, I have been told that the conference was a success and that the sessions were informative.

Last year at the SOA Annual Meeting & Exhibit in Las Vegas, there were 10 sessions with GI content (not including general sessions applicable to actuaries in all practice areas). Planning is underway for the 2017 SOA Annual Meeting & Exhibit in Boston. We have scheduled five GI-specific sessions and six GI-relevant sessions. This means that every concurrent session slot will have at least one GI-specific or GI-relevant session. In addition to this, every concurrent session slot also includes sessions with content relevant to actuaries from all practice areas that have not been specifically noted as GI-relevant. One of the planned GI-specific sessions continues on the theme from last year’s session on big data in general insurance. It is a session that will focus on the regulatory issues from the use of artificial intelligence systems for underwriting, rating and/or claims. Other planned sessions include a look at the future of the general insurance industry in a world with autonomous vehicles, use of catastrophe models, the evolution of ORSA, integration of predictive analytics with business operations, and flood risk financing. We are currently recruiting for moderators and presenters. Please contact me if you are interested in moderating or presenting for a planned session.

Be sure to read the June/July issue of The Actuary as it will include a GI themed article, “How the Design of the Florida ‘Cat Fund’ Fairly and Efficiently Provides Funding for Catastrophic Hurricane Losses in the State," by Rade Musulin and Jack Nicholson. This article fits in as a companion piece to the American Academy of Actuaries flood insurance monograph which was published in April of this year. This report is one of three significant flood insurance publications released in April of this year (“American Academy of Actuaries Monograph,” “Center for Insurance Policy and Research of the National Association of Insurance Commissioners Flood Risk and Insurance Study” and the “U.S. Government Accountability Office Flood Risk and Insurance Report”). These reports were released because the National Flood Insurance Program (NFIP) is set for reauthorization in September of this year. The three reports and The Actuary article contain timely information to inform readers on the issues that should be considered by Congress.  My article, “National Flood Insurance Program: Reauthorization 2017,” in this issue of General Insurance Insights provides a high level summary for readers.

Be sure to check out the SOA’s GI community discussion forum at engage.soa.org and feel free to add to the discussion. Some interesting topics have come up (e.g., cyber risk, telematics UBI, autonomous vehicles, climate change, solar flares, big data, and the insurance industry’s limited antitrust exemption). Note that the GI community discussion forum is private; only those members listing GI as their primary practice area have been invited to join. If you would like to join the General Insurance community but did not receive an invitation, please send an email with your name, address, employer and email address to generalinsurance@soa.org.   

The syllabus for the SOA’s GI exams has remained relatively unchanged since its creation in 2013. The main reason for this is that the SOA’s GI track for fellowship is currently under review by the NAIC. The NAIC’s review was instigated by the SOA’s request in 2013 to have fellows of the SOA from the GI track recognized as qualified to sign U.S. Property & Casualty Statements of Actuarial Opinion. We look forward to a decision by the NAIC. It should be noted that the syllabus for the GI Financial and Regulatory Environment – U.S. exam will see some changes that go beyond updates. The following identifies the changes in syllabus resources for fall 2017 from spring 2017 (that are not updates):

  • Addition of a case study
  • Addition of ASOP No. 23, Data Quality
  • Addition of IAA ISAP 1A, Governance of Models
  • Deletion of Academy Monograph, “The National Flood Insurance Program: Past, Present … and Future?” July 2011
  • Deletion of NAIC “Biggert-Waters Flood Insurance Reform Act of 2012,” October 2012
  • Addition of Academy  monograph “The National Flood Insurance Program: Challenges and Solutions,” April 2017

In my opinion, the biggest change is the addition of a case study. Case studies are a unique feature of the SOA’s fellowship exams. A case study involves presentation of details for a fictitious GI company including its annual statement, business plan, Statement of Actuarial Opinion, and Actuarial Report excerpts. Inclusion of a case study will permit exams to increase the cognitive level by asking candidates to interpret information that replicates real world scenarios. 

Our goals with General Insurance Insights are to keep readers informed on topics of interest to general insurance actuaries and to develop the general insurance actuarial community within the SOA. We welcome your feedback and ideas to help us achieve these goals. If you have questions, feedback or ideas regarding General Insurance Insights, feel free to contact me.

I would also like to take this opportunity to inform our readers that we are always looking for volunteers in general insurance at the SOA. Whether it be for exams, research or writing an article for the newsletter, let us know if you are interested.

Anthony Cappelletti, FSA, FCIA, FCAS, is a staff fellow for the SOA. He can be contacted at acappelletti@soa.org.