20141027-奥纬咨询-2014_Insurance_Risk_Benchmarks_Report_Annual_Statistical_Review_82页_13mb

Insurance Risk Benchmarks Research: Annual Statistical Review Summary

Executive Summary
Released in September 2014, this report provides comprehensive analysis of insurance risk trends and benchmarks for the property and casualty (P&C) industry, based on empirical data from hundreds of companies. Key trends in 2013 included relatively low natural peril activity and strong financial performance. The report introduces refined metrics, such as market slope and correlation adjustment based on market share, to assist in benchmarking inputs for economic capital models. It emphasizes the importance of recognizing industry trends and integrating risk benchmarks into strategic decision-making, particularly for underwriting and reserving risks. The UK-specific section adapts the analysis to data from the UK market, highlighting differences in payment patterns and reserve cycles.

Key Findings

1. Timing Risk (Payment Patterns and Durations)

• Payment patterns vary by line of business. Short-tailed lines like private passenger auto show stable losses, while long-tailed lines like workers' compensation exhibit higher volatility.
• Duration metrics indicate that claims-made business matures faster than occurrence business, reducing duration risk.
• Volatility is influenced by natural perils and market segments, with regional variations affecting loss ratios and payment cycles.
• Market slope analysis identifies opportunities in specific lines (e.g., medical professional liability) where underperformance is less likely.

2. Underwriting Risk

• Loss ratios were generally favorable in 2013, but lines tied to bodily injury costs (e.g., general liability, products liability) showed higher uncertainty and correlation.
• Correlation between lines is predictable and functions of market share—note that larger companies experience higher loss ratio variability.
• Regional market segments (e.g., Southeast/Gulf in the US) performed differently, impacting profitability and risk exposure.
• Insights for insurers: Focus on systemic drivers of loss costs and use benchmarks to model inter-line correlations accurately.

3. Reserving Risk

• Reserve development cycles exhibit strong auto-correlation—loss ratios from profitable years are likely followed by profitable ones, and vice versa.
• Ultimate reserve risk is higher for long-tailed lines, requiring careful consideration of macroeconomic factors in economic capital models.
• Volatility in reserve estimates was reduced in 2013 for younger accident years, but adoption cycles demand multi-year risk modeling.

UK Insurance Market Benchmarks

• UK data (gross of reinsurance) from 1994-2013 reveals distinct payment patterns by line (e.g., public/products liability had longer durations).
• Underwriting and reserve cycles mirror US trends but with lower statistically significant correlations due to data differences.
• Reserve development auto-correlation is high for most lines, and one-year reserve changes vary by line. Tail-end homogeneity in loss cycles remains prominent in casualty lines.

Key Trends and Implications

• Overall Insight: The 2013 positive results reflect favorable market conditions, but long-term risks from reserve cycles and inter-line dependencies (e.g., medical cost inflation) persist.
• Economic Capital Modeling: Use risk benchmarks for peer review and parameterization; auto-correlation and cycle modeling are critical for accurate capital assessment.
• Strategic Actions: Insurers should refine market segmentation, monitor lines with high bodily injury costs, and integrate UK-specific data for multinational exposures. The report underscores the need for adaptive risk modeling rather than static approaches.