Actuaries and Property / Casualty Insurance
The profession of actuary has its roots in personal lines insurance, in life insurance to be more precise. Only after the mathematical foundations for scientific consideration of non-life insurance were laid down at the beginning of the last century did questions pertaining to non-life or property/casualty insurance begin to receive attention from the actuarial profession. Nowadays "claims actuaries" have become an integral part of liability, property/casualty, personal injury and motor insurance and it is hard to imagine these lines of business without them.
Product development
Modern product development demands mathe¬matical and economic thinking as well as intuition. Using market analyses of the needs of insurance customers, actuaries gain insights into the necessity to adjust existing tariffs and to introduce new ones. Using these insights they then work on the calculation of the premiums and the technical actuarial reserves as well as technical specifications for the tariff in question. In so doing, they use appropriate actuarial assumptions. Of course, the insurance contract has to cover the costs it causes. One important instrument to monitor these conditions is so-called contribution margin calculation. Thus, mere product development has expanded these days into a more comprehensive task of product controlling performed by actuaries.
Reservation and pricing
In non-life insurance the claims reserves are particularly important for the insurance company. Actuaries can examine and determine whether these reserves are high enough using theoretical risk models and methods. In lines of business with so called long tails – such as liability insurance – the findings about claims settlement are crucial for risk-adjusted pricing.
Annual accounts
Non-life actuaries are also closely involved in producing the company's annual accounts. They calculate balance sheet values, make cash flow forecasts and prepare data for internal accounts. They are also required to perform re-calculation when dealing with personal injury insurance that includes premium rebate.
DAV's Non-Life Insurance Committee
The DAV's Non-Life Insurance Committee is a standing committee that looks at specialist issues relating to property/casualty insurance and promotes the professional interests of actuaries working in this field in Germany.
The committee is mainly concerned with the topics and questions with which Responsible Actuaries working for non-life insurers are confronted, and regularly provides specialist help and guidance for the practical day-to-day work of these actuaries.
In addition, supporting the DAA in all matters relating to the education and training of actuaries in the field of non-life actuarial mathematics is another focus of the committee's work.
The members represented on the committee cover the entire spectrum of activities and areas of expertise of actuaries working in property and casualty insurance. Great importance is attached to ensuring that this is the case, particularly with regard to classes of insurance, institutions and special methodological expertise.
The Committee's working groups
The Committee has set up the following active working groups to deal with the wide range of topics in the area of non-life insurance
The Claims Reserving working group deals with the actuarial valuation of technical provisions in the non-life segments. This includes both accounting-independent methodological and procedural aspects as well as the treatment of specific technical problems and the effects of HGB, Solvency II and IFRS.
The Working Group on Pricing deals with all aspects of pricing in non-life insurance, unless it is operated in the same way as life insurance. The WG deals with the approaches and tools that the non-life actuary normally uses for the various steps from the data to the finished rate.
With the increasing digitalization and networking of households, industry and public infrastructure, the risk of cyberattacks is also growing, which can lead to a variety of different property, financial and reputational losses. In light of the growing need and increasing demand for corresponding insurance cover, questions of product development and pricing as well as the risk management of cyber risks are increasingly coming into focus. The Data and Methods for the Assessment of Cyber Risks working group analyzes how and which data can be used to make cyber risks measurable and controllable and thus insurable - possibly using new methodological approaches.
The Climate Change - Actuarial Implications in Non-Life Insurance working group deals with the substantive effects of climate change on the activities of actuaries in non-life insurance and examines the practical consequences for actuarial tasks, particularly in the areas of pricing, underwriting and modeling.
The HUK Working Group deals with all technical issues relating to accident insurance with guaranteed premium refunds and pension provisions in general liability insurance, motor third party liability insurance, motor accident insurance and general accident insurance. In addition, it supports the responsible actuaries in these areas and regularly provides assistance for the practical work of actuaries.
The Qualification Working Group is responsible for the independent quality assurance of the special knowledge examinations prepared by the relevant examination committee of the Training and Examination Board and, in particular, for the quality assurance of the examinations in the subjects “Casualty Insurance 1” and “Casualty Insurance 2”.
In addition, the members of the working group are responsible for the ongoing development of the continuing education program in the area of property/casualty insurance and not only advise the German Actuarial Academy on current topics and formats, but also contribute to the practical implementation of the program as speakers.
