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Advanced Topics Panel
and Small Group Project
Moderator:
Alice Underwood, FCAS, Executive Vice President, Willis Re Inc.
Panelists:
Charles Goldie, FCAS, Senior Vice President, Manager of Specialty Lines, Partner Re U.S.
Jeff Dollinger, FCAS, Senior Vice President & Chief Actuary, Endurance Reinsurance Corporation of America
Daniel R. Kamen, FCAS, Vice President, Folksamerica Reinsurance Company
Paul Ingrey’s “Reinsurance Clock”
EUPHORIA!
All companies flourish
Pricing starts to drop
Companies compete to
increase market share
Capacity gets expensive
Prices up sharply
Prices fall dramatically
Crunch
AM Best writes this decade’s
“letter of concern”
Profits slide
Results horrible
Pricing CANNOT go lower
Source: David Skurnick, “The Underwriting Cycle”
http://www.casact.org/pubs/forum/93sforum/93sf377.pdf
What Triggers Underwriting Cycles?
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Catastrophic events
New legal theories
Interest rates
Wall Street
The demands of growth
Naïve capital
What Fuels Underwriting Cycles?
• You get the money FIRST…
…and you pay claims LATER
• Incentive plans
• “Feeding the Beast”
• Herd mentality
• Actuaries?
What Dampens Underwriting Cycles?
• Regulation
• Nimble capital
• Actuaries?
What’s the Actuary’s Role?