Property and casualty (P&C) insurance headlines these days generally focus on issues relevant to current policies. Although not receiving as much attention, historical accident years have also been experiencing deteriorating trends, both for mature exposures such as asbestos, environmental pollution, and construction defect claims as well as for emerging exposures related to talc, sexual abuse, and opioid litigation.
Understanding the impact of these potential legacy losses is important, not only in the context of establishing an appropriate reserve, but also to form a view of the load for mass torts needed for pricing current policy years. Very often insurance companies segregate these mass tort claims, housing them in discontinued operations, ceding such exposures as part of adverse development covers or simply removing them from actuarial analyses to prevent them from “distorting” the analyses of the “normal” claims.
Milliman announced today that it has released version 2020b of its Arius® solutions, a family of state-of-the-art reserve analysis systems for property and casualty insurers. This update provides significant enhancements to the systems’ analytical capabilities, together with key additions to the reporting and data management tools.
This release adds new generalized linear modeling (GLM) capabilities to help actuaries better model and understand their claim costs. GLM tools can be especially valuable when analyzing periods of inflationary pressure on the claim process or significant changes in claim handling within a company or throughout the industry.
In addition, the new release of Arius Enterprise®—Milliman’s reserving solution designed specifically for larger insurers and self-insureds—helps actuaries analyze results at one level of detail and then report on them at different levels. The system’s new allocation tools more reliably and efficiently perform the summary and reporting work that is typically accomplished using riskier spreadsheets.
Our Arius solutions are specifically designed to help our clients better understand and account for the complexities in their business. This release provides a number of new tools to help actuaries with sophisticated calculations, as well as data and report management, so they can focus on the areas where their substantial expertise can provide the most value to their organizations.
Today’s actuaries routinely have too much data to analyze. And many insurance organizations have become so complex that managers can’t be sure that loss reserves are adequate and reasonable, especially under ever-tightening deadlines.
Arius Enterprise is a complete software solution that streamlines your entire P&C loss analysis process. It provides immediate access to all your data from throughout the company; the industry’s best tools for analyzing and reporting on your results; and systems to automate much of the mundane work throughout the entire loss reserving process. You get analyses that are efficient, consistent, and accurate. You can be more confident in your results and add more value to your organization.
Implementing insurtech initiatives as part of the day-to-day operations of an insurance company can add uncertainty to its financial projections. For example, there are some specific ways that insurtech initiatives could affect loss reserve analyses. A loss reserving analysis done without recognition of an insurtech initiative can lead to both inaccurate overall financial projections and incorrect information on the success or failure of the initiative itself.
In this article, Milliman’s Tom Ryan discusses several actions insurers should employ to effectively manage the potential disruptive effect of these new technologies.
Tax reform in the United States is influencing the economic benefits previously enjoyed by some captive insurance owners. Two reform items specifically affect captives: the new marginal rate, which was decreased from 35% to 21%, and the change in the benchmark interest rates to be used for discounting loss reserves. In this article, Milliman’s Joel Chansky and Mike Meehan provide analyses demonstrating the effects that these new tax items have on both large and small captive insurers.
The ability to benchmark an entity’s results against others in the industry and the industry as a whole can provide significant insights into both actuaries’ daily work and their strategic planning. Using the most advanced benchmarks available can help to ensure a more efficient integration of reserve variability analysis into enterprise risk management processes and enhance an entity’s strategies. Milliman consultant Mark Shapland offers some perspective in this article.
The article was originally published in the March/April 2018 issue of Contingencies.
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