Current Irish Issues in the GI Market session (26 June 2013)

A session was held at the end of June 2013 at the Institute of Actuaries which gave an update on the latest developments within the Irish general insurance market. This was in the form of a podcast of the general insurance element of the Society of Actuaries in Ireland (“SAI”) Annual Forum taking place at the end of May.

Central Bank of Ireland (“CBI”) Letter to High Impact firms February 2013

The first session highlighted the 5 requirements (2 new and 3 existing) outlined in the CBI’s letter dated 22 February in respect of Signing Actuary Reports. The letter was addressed to CEOs (and not the Signing Actuary) of high impact firms (as classified under PRISM (Probability Risk and Impact SysteM) – a risk-based framework introduced by the CBI in November 2011).

High impact firms were asked to incorporate the 5 requirements in the year-end 2012 Statement of Actuarial Opinion (“SAO”) reports. The purpose of the letter was for the CBI to gain a greater understanding of these companies and for firms to discuss any issues with the CBI. Ultimately, the CBI are looking for consistency in SAO reports across the different categories of firm

The 5 requirements are outlined below.



1 – Actual vs Expected (Existing)

The Chief Actuary or the Signing Actuary, as appropriate, should provide a short analysis of how actual claims experience during the year compared to expected development for both prior and current years. This analysis should be quantified where appropriate and should also include a read-across to current pricing and comment on whether this has any implications for reserving going forward.

2 – Data (New)

This is a report by the Pre-Approval Controlled Function (“PCF”) which supports the Data Accuracy Statement where one is provided in the SAO Report. The report should reflect the considerable reliance placed by the Signing Actuary on the quality of the data (with particular emphasis on case estimate data) and also include reference to any changes in claims procedures during the year.

3 – Risks to reserve adequacy (Existing)

Analysis of the material risks to reserve adequacy:

  • Needs only cover the risks as would lead to the reserves being understated by a material amount relative to the solvency margin held.
  • Provide distribution of reserves, where appropriate

4 – Reasons and Rationale (Existing)

Include the reasons and rationale to demonstrate how Signing Actuary arrived at reserves i.e. choice of assumptions and methods

5 – Prospective uncertainty (New)

Quantification of uncertainty should be prospective as well as retrospective


Telematics is very hot topic talked about at the moment and is becoming increasing in the pricing of premiums for young drivers.

This session looked at the development of telematics globally with the US and Canada leading the way with significant Usage Based Insurance (“UBI”) penetration and established programmes. Europe, the Middle East and Africa are behind the US but there has been recent activity in UBI and Asia has limited activity but there is emerging interest, particularly in China.

In the US companies 8 of the top personal lines insurers have implemented UBI programmes with Progressive’s Snapshot programme leading the market. Snapshot uses a wireless device which records time, speed and harsh breaking. A discount is calculated based on the first 30 days, then applied for the remainder of the term. 40,000-50,000 new drivers per month are opting for this programme which has been approved in 42 states.

There has been a clear European interest in telematics with those drivers more interested being those with a low mileage and also higher utilisation drivers.

Although the use of UBI results in discounted premiums for drivers it also introduces a range of new services where customers can opt (and pay) for services they value and insurers can use these to differentiate the products they offer. As well as offering personal and family security the use of telematics could influence drivers by improving their driving behaviour – better driving has the potential to save lives which in turn leads to better claims experience and improved profitability for insurers.

In order to make the most efficient use of extensive pool of telematics data available it is vital to extract, manage, analyse and interpret data effectively through the use of systems and processes together with benchmarking experience. Also, granular data facilitates continuous analysis that will significantly reduce the time taken to get a more effective scoring system. This score can be used by companies to decide on pricing and the distribution of products and by customers to monitor their driving behaviour!

Questions included whether or not Smartphones would replace the telematics box. It was felt that smartphones could be the way forward as this would lower costs. However, people would have to remember to turn on the App which would enable the data to be captured!

Lastly, one of the main reasons for not having boxes in cars is the “Big Brother” attitude towards telematics. Gradually the percentage of those people who don’t mind is rising but we will need a clear guidance on what will and won’t be done with the data in the future.

Clearly telematics is here to stay but the issue is whether or not people will be able to accept that information on their driving behaviour is being stored and maybe used in the future – is this really any different to the information people are giving out on Facebook or Twitter… it’s for the customer to decide!

Watch out for our Gender Directive blogs which also look at how telematics is affecting our lives.