Premium pricing: Placing value on risk, contingent events and portfolio risk. Generally done as first principle compound distribution stochastic modelling, incorporated into bespoke financial model to assess various risk structures and retention/transfer options.
Product development: Design and pricing of insurance or risk-based products, especially in the Value Added Product space can be significant profit contributors to various clients. These include Extended Warranties, Specified All Risk insurance, Credit insurance, Legal insurance and Value added services ancillary to core product.
Reserving: Mostly used in insurance programmes or material balance sheet provisioning. This extends to the calculations of requirements based on regulatory reserve requirements and international accounting standards
Reinsurance structuring: Testing multiple reinsurance structures for primary insurers and captives to optimise the balance between profitability, risk and capital requirements (VaR and regulatory).
2. Risk finance structuring
This is predominantly utilised by single parent/group captive risk retention programmes but also for commercial insurance in scheme context. These have been successfully implemented for both short-term/general insurance risks as well as Employee Benefits risk benefits (group life, PHI, disability insurance etc.).
Focus on optimisation of Total Cost of Risk (TCoR) with balance between maximising return on funds committed with conventional insurance protection required. Includes aspects such as review and integration of Risk Bearing Capacity (RBC), market price of risk and unique risk profiles to develop responsive structures.
Responsibilities include reviewing the reliability and adequacy of the technical liabilities and capital adequacy requirements, identifying and explaining the differences between the measurement models in terms of IFRS and SAM as well as providing ancillary advice on risk structuring, reinsurance requirements, material risk and the impact on the Company’s solvency and any other relevant requirements as they may arise.
Outsourced Risk Management Control Function
Can incorporate Actuarial function or operate as stand-alone. Execution of company risk management strategy, further enhancement and monitoring of efficiency and effectiveness of risk management policy and procedures. Requisite reporting to Board and other committees where required. Engagement of all relevant parties in managing risk to insurer in holistic and integrated manner.
The Own Risk Solvency Assessment is an insurer-specific version of the ERM model that is used for captive and niche insurance companies to assist in the implementation of the SAM regime
4. Enterprise Risk Management Consulting
note: The last three items are in conjunction with DMS
Cost/ Benefit assessment
Stochastic ERM modelling provides an additional dimension in the assessment of risk / benefit ratios for various options. Often risk management initiatives are evaluated against the benefit provided.
Business Interruption / Business Continuity modelling
BCM modelling provides a means to assess exposures that relate to critical dependencies (both in isolation and in the aggregate), business interruption exposures and potential operational efficiencies.
ERM modelling effectively describes the entire universe of risk modelling within any organisation, which allow clients to comprehensively model their operational environment as well as test the impact of specific corporate strategies on the company.
This entails the allocation of single group premiums amongst individual operating entities based on a combination of the exposure and risk features of each entity. As this is often a very contentious issue amongst operating entities, it provides a clear, transparent and open method that avoids many of the problems associated with other allocation methods. It also assists in transfer pricing within group.
Risk Bearing Capacity Estimation
The exercises provide estimates for corporates in accordance with varying international and corporate governance standards (ISO31000, BS31100, King III) and as a defining parameter in self-insured risk retentions and risk frameworks. Variety of models and detail approaches available based on client requirements.
Actuarial reporting & portfolio management (in conjunction with DMS)
Portfolio, experience and trend analyses for both commercial and personal line insurance portfolios. Applicable to risk retention programmes and commercial schemes. Customisable reporting templates and reporting intervals. Guidance and allowance for client-specific key performance variables and risk indicators.
Risk Governance (in conjunction with DMS)
Development of (ISO/COSO/King compliant) corporate risk governance structures, including risk management frameworks, policies and procedures. Customisable risk templates and registers as well as Management Information Systems (MIS) informational requirements. Development can also be pre-designed to interface with in-house developed Enterprise Risk Model to create stochastic simulation environment that is consistent with risk register and related exposures.
Claims assessment (in conjunction with DMS)
This includes Professional Indemnity, Bankers’ Blanket Bond, Fraud, Business Interruption, Trustees Liability and Directors and Officers Liability claims. The approach followed is usually a stochastic review (BI), actuarial review (PI / FG) or a quantum assessment (BI, PI & FG).