Prudential Requirements

1
Prudential Requirements

• Manalur Sandilya
• Consulting Actuary

2
Outline

• ICPs 18 through 23
• Interlinked by the same theme
• Interpretation of Prudent Prudent Expert
• Non-Life Insurance Focus
• Ideas applicable to Life Insurance situations as
  well

3
Background

• Change in the Insurance Environment brought by
  movement from Tariff regime to a non-tariff
  regime
• Actuarial Cycle -- a shorter version
• Liability Valuation Standards
• Suggested/Guidance/Approval
• Available Methods

4
Valuation Methodology

• Paid Development
• Weighted Average or BF
• Incurred Development and BF
• Frequency/Severity methods
• Data Issues
• Objective -- Robust Estimate

5
Ratemaking Issues

• Basic Premise -- Properly priced and marketed
  product will not create reserving issues
• Where to begin -- given current conditions,
  start with reserving
• A forward looking analysis
• Data issues

6
Rate Adequacy

• Actuarial cycle
• Evaluate impact of ratemaking
• Rate Adequacy Analysis
• Leading to IBNR studies

7
Other Issues

• Handling of Reinsurance
• Appropriate Methods
• Net Analysis and Gross Analysis
• Testing of Analytical results
• Applications to ECR and FCR
• Future?