Milliman consultant speaking at Mortgage Bankers Association forum

Milliman consultant Madeline Johnson, CMB, will speak at the 2017 MBA Risk Management, QA and Fraud Prevention Forum this September in Miami, Florida. She is schedule to speak at the session entitled “QC for Purchase Markets” on Monday, September 25.

The three-day forum will be held from September 24-26. For more information on the talk and forum, click here.

20/20 Beyond the Numbers: Retirement in Asia-Pacific

Join Milliman consultants on this webinar as they consider the implications of the recently published “Asia retirement income report.” The webinar will include a 20-minute presentation led by Wade Matterson, practice leader for Milliman’s Australia office, and Richard Holloway, managing director for Milliman’s South East Asia and India Life consulting practice. A 20-minute Q&A session will follow.

Date: Wednesday, 23 August
Time: 11 a.m. India time
12:30 p.m. Thailand/Indonesia time
1:30 p.m. Singapore/Hong Kong/Taiwan/Malaysia time
3:30 p.m. Sydney time

To confirm your participation, RSVP before 16 August. Registered participants will receive a link to the webinar and local/toll-free numbers for most countries in the Asia-Pacific region a few days prior to the webinar.

New business surge leads to double-digit embedded value growth in Asia

Milliman has announced the findings of its study on reported year-end 2016 embedded value (EV) results for 34 major insurance companies operating in Asia, excluding Japan. The report highlights trends among companies reporting EVs and reveals a growth in reported 2016 EV of 15.3% by Asian insurance companies. This was primarily driven by a 40% growth over 2015 in Value of New Business (VNB) across the region in 2016.

The Milliman 2016 Embedded Value Results: Asia (excl. Japan) report analyses and discusses the EV methodologies and assumptions, the impact of regulations, as well as recent developments with the long-awaited IFRS 17 reporting regime.

“The China and Hong Kong markets were the main drivers of the VNB explosion in the region; both having mainland consumers to thank for these results” said Milliman principal and consulting actuary Paul Sinnott. “Although we have some longer term concerns about the sustainability of profit margins in the region, recent yield curve rises are relieving some margin pressure in the short term.”

A few key insights from the Asian report include:

• In 2016, total reported Asian EV grew by 15.3%, on a comparable basis, to USD 339 billion from USD 294 billion.
• While some European multinationals reduced their Asian EV reporting last year, there were three companies disclosing EV results for the first time in India, along with the first comprehensive IEV disclosure associated with ICICI Prudential’s IPO in September 2016.
• Life insurance sales continued to rise strongly in the region during 2016, with gross written premium (GWP) estimated to have increased by 28%, with China’s 43% growth being a major contributor.
• VIF increased for all markets. South Korea recorded the largest VIF growth of 31%, mainly from margin-driven growth in VNB across all companies; Hong Kong also posted strong VIF growth of 20%, driven by large volumes of business sold to mainland Chinese visitors.

To download the report, click here.

Obstacle course racing presents insurers with unique hurdles

Obstacle course racing (OCR) like those featured on American Ninja Warrior have grown in popularity. As the extreme factor of OCR increases so does the risk for event organizers. These competitions do not have the reliable historical data, consistency of events, and general safety measures seen in traditional footraces, making it difficult for insurers to price OCR’s exposures.

A new article by Michael Henk entitled “Obstacles for insurers of obstacle course racing” explores OCR’s unique risks. It also provides perspective for insurers to consider when pricing premiums in this emerging market.

Here is an excerpt from the article:

Imagine that there is a local half marathon looking for liability insurance to cover its event. An insurance company can use data from past races (either in the same location or spread across a broad geography) to predict expected losses. Because half marathons have been around and been insured for decades, there is enough data for a credible analysis. Because OCR was almost nonexistent until 2010, insurance companies do not have that same degree of industry data. As with any emerging market (such as cyber liability, drone insurance, and self-driving cars), insurers do not know what to expect, and therefore, insurance premiums are priced higher to make up for the unknowns.

Another obstacle in the way of establishing a credible database is that all obstacle course races are not the same. When you decide to run a marathon, you know what to expect: run 26.2 miles. Road races might vary by elements such as terrain, local weather, and elevation changes, but overall, similar risks can be expected across all events. If you run a marathon in Chicago, it is similar to running a marathon in Miami. Likewise, insurers also know what to expect with these traditional races. They can use past data and rely on well-established safety standards to determine the proper level of risk and premiums.

Obstacle courses do not have the same consistency. Running a Tough Mudder race in Minnesota is entirely different from a Spartan race in Florida. The lack of standardization makes it difficult to price insurance policies. For example, if one race has a wall that is 20 feet high and another event has one that is five feet high, they pay the same premium even though the risk of injury from falling is greater with the 20-foot wall. These higher premiums can potentially cause race organizers to pay more for insurance than necessary. The risks associated with one obstacle course can be completely different from the risks of another, but insurance companies will still price them relatively the same as there is not enough historical data to allow for differentiation in the policies.

If the industry developed a consistent and credible database of obstacles, insurers would be able to accurately price each race based on the risk of individual obstacles. In fact, with a database like that, races could even be tailored to fit a specific target “riskiness,” selecting obstacles that result in an organizer-preferred premium amount. The current way of one-size-fits-all is not an efficient use of funds for race organizers.

The article was co-authored by Jenna Hildebrandt, an actuarial science student at the University of Wisconsin – Madison.

Evolving FRM strategies still valuable to life insurers

In this A.M. Best interview, Milliman consultant Kamilla Svajgl offers perspective on financial risk management (FRM) strategies currently used by the life insurance sector. She also discusses how companies with sophisticated FRM strategies in place prior to the global financial crises withstood its effects.