A Global Conversation
Calculated Risks
Industry professionals discuss the many roles auditors and actuaries play in the insurance industry with AMBestTV.
R. Dale Hall
“There are a lot of opportunities across a lot of different product lines [for microinsurance in Latin America,] whether that be individual life, or credit life in association with a loan or a mortgage, health and disability. When someone goes into a hospital, some sort of micropayment there, or especially even on the property or agricultural side. One of the big things that is needed, though, is more data. Some of these products are offered, and claims ratios are not high, and you’re looking to collect more data. I think from the actuarial profession’s point of view, trying to get more data, use more data, study ways that you can use parallel data to make good estimations for claims and loss ratios. It’s a big challenge, but a neat opportunity for the insurance world.”
R. Dale Hall
Managing Director of Research
Society of Actuaries
Dorothy Andrews
“With any technology, you can’t look at it from one angle. You’re going to have to look at risk from lots of different perspectives. You’re going to need a lot of diversity of opinion in how to examine it. It’s not just the actuaries. It’s not just the underwriters. It’s not just the people in marketing. It’s not just your compliance people. Everyone needs to be working together and communicating together, because it’s through that kind of diversity of input that everyone becomes much better informed and that you’re able to see what the likely areas of risk could be.”
Dorothy Andrews
Associate
Society of Actuaries, Insurance Strategies Consulting
Jim Murphy
“I think auditors have a unique ability in serving our clients to see what’s happening in a wide variety of different insurance companies. My general theme with them is if they were playing in the “Game of Thrones,” their motto would be, ‘The soft market is coming.’
Premiums and claims are moving in opposite directions, and management’s doing everything they can to identify those trends and control cost at the same time.
I think insurance companies are going to do great and get through that. The problem is that’s going to take a lot of resources. Those resources are going to come from all across the companies.
With that, my concern is that the internal controls that we’ve done a decade worth of strengthening are going to be at risk for competing priorities. We’ve read recently in the press about insurance companies restating their earnings, having to recognize reserve deficiencies and just in our observations of clients, we’re seeing smaller little control failures that aren’t leading to any kind of major problems.”
Jim Murphy
Partner
Johnson Lambert
Billy Wong
“Asia is a very important region in the world and is growing. With aging populations and increasing medical technology, all countries are facing a lot of challenges. The insurance industry must innovate and solve those problems. How we tackle the aging populations so each individual can retire happily with sufficient savings. With rising medical costs, what would be the insurance product or insurance saving product which enable individuals to meet up all the medical expenses?
[For insurers to cope with these changes] innovations are important. Being actuaries, of course, we are working with different stakeholders in the insurance industry, including the customers, product development people, salespeople to find the ways to get the innovation product. Technology will [also be] important, because now, we can collect the big data from the individual more easily. How we combine the big data technology with the traditional insurance will be the key.”
Billy Wong
Business Leader of Health and Mandatory Provident Fund
Mercer Marsh Benefits
Simon Lam
“The Hong Kong government has issued a Hong Kong annuity product. Actually, from our point of view, this is very attractive. We understand that the internal rate of return, they have already achieved 4%. One of the misunderstandings the public has is they think about that this is investment. If we are talk about annuity, it should be conservative utility for the retirement. That’s why they should not have the comparison with the investment. If we are talking about some of the very conservative vehicles, they could achieve 4%.
From an actuarial point of view, this is a very nice retirement vehicle. And also, it could catch on with the longevity risk as well. We don’t think we should have a full investment over there, but if we should have some of the conservative investment, we should be invested with the annuity product.”
Simon Lam
President
Actuarial Society of Hong Kong
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