Underwriting for Tomorrow

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Underwriting for Tomorrow

• Mike Wills
• CIP Symposium
• April 24th, 2007

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Underwriting for Tomorrow

• Underwriting - Predicting the Future
• Components of Underwriting
• How they have changed
• Costs breakdown
• The New Shareholder
• The New Customer
• Impact on Underwriting
• The Underwriter for Tomorrow

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Underwriting Predicting the Future

• Ability to predict future losses, and compensate
  customers for these losses, and make a profit for
  shareholders

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Underwriting Predicting the Future

• Ability to predict future losses, and compensate
  customers for these losses, and make a profit for
  shareholders

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Underwriting Predicting the Future

• Components of Underwriting
• Pricing
• Quantification
• Selection

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How They Have Changed

• Costs Breakdown
• The New Shareholder
• The New Customer

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Breakdown of Costs
Petro-Canada Refining and Marketing Profit
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Breakdown of Costs
Losses
Losses TBA
Ops / Acq.
Insurance Industry Costs and Profit
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How They Have Changed

• Costs
• Losses Understanding the Happenings
• Incurred Claims Losses that we are aware of,
  and have forecasted for
• Current Trends Losses that we are aware of, but
  have not forecasted for
• Emerging Risks Losses that we are not aware of,
  and have not forecasted for

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Changing Risk

• Some concerns / issues for todays businesses
• Supply Chain (increased costs, interruption)
• Competition (globalization,
• Business Continuity (disaster recovery, pandemic)
• Human Capital (succession, safety, training)
• Reputation (recall, etc)
• Technology (rapidly changing, security, cyber
  attack)
• Regulatory (contracts, government..
• Physical Hazards (higher awards, natural
  disasters)

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How They Have Changed

• The New Shareholder
• More choice
• More competition for capital
• Looking for large market shares
• Short-term investors

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How They Have Changed

• The New Customer
• More sophisticated
• Looking for the best price
• More commodity driven
• Looking for value for the money

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Impact on Underwriting

• Claims Management
• Actuarial
• Risk Management
• Consolidation
• Commoditization
• Diversification
• Improved Stability, Innovation, Expertise

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The Underwriter for Tomorrow

• What will underwriting look like tomorrow?

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The Underwriter for Tomorrow

• Man (or Woman) vs Machine

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Changing Risk

• Some concerns / issues for todays businesses
• Supply Chain (increased costs, interruption)
• Competition (globalization,
• Business Continuity (disaster recovery, pandemic)
• Human Capital (succession, safety, training)
• Reputation (recall, etc)
• Technology (rapidly changing, security)
• Regulatory (contracts, government..
• Physical Hazards (higher awards, natural
  disasters)

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Underwriting for Tomorrow

• Thank you