Not so many years ago the actuary’s main job was to estimate the amount of reserves that was needed to cover all future liabilities. Required capital for business was calculated via a simple formula, not taking into account the different underlying risks insured. In recent years, many insurance companies suffered large losses, because they were not fully aware of their risks.
The recent changes in legislation addressed this issue and widened the responsibilities of the actuary. Today, supervision requires insurance companies to analyse their risks on a quantitative and qualitative basis. This approach allows insurance companies to reduce their required capital by managing their risks on the spot. We can help insurance companies manage their risks better.
The business nature of reinsurance companies requires substantial actuarial expertise as well as in-depth knowledge of the covered risks. In our Swiss practice we have worked with many Swiss and International reinsurance companies in the area of risk quantification.
An increasing number of companies are establishing captives as an answer to their insurance problems e.g. as a means to address rising cost of premiums and to provide insurance coverage for their group companies.
However, operating and managing a captive is ever more challenging with the need to deal with various complex issues. These range from regulation to tax, to actuarial assessment and pricing and from emerging risks to claims, litigation and reinsurance recoveries.
Captive owners have generally relied upon their captive managers to deal with these issues, however captive owners are often inundated with daily business and need expert advice and resources to cope with these challenges.
Due to more stringent audit and regulatory requirements and the increased focus on corporate governance, captive owners should consider obtaining advice from an organisation that is not affiliated with the insurance broker or captive manager firm to conduct strategic and actuarial reviews of their captives.