140 likes | 282 Views
CAE Meeting – Zurich April 2004. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. What’s your expectation?. Loss ratio Analysis: Balance between stability and responsiveness.
E N D
Loss ratio Analysis:Balance between stability and responsiveness
Cumulative Effect of Rate ChangesSimple Math; full appreciation of business effect is another thing
Long-term, which is more stable, loss trend or price movements?
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
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.
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