Insurance risk research shows industry struggling with growth and reserve risks

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Insurance Industry NewsAon Corporation’s capital adviser and global reinsurance intermediary, Aon Benfield, has released a report containing the results of its annual study – called the 2011 Insurance Risk Study – which is used by the industry to benchmark underwriting risk, and for modeling through the risk parameters it provides.

This research – which is the sixth that has been published by the company – offers volatility benchmarks for underwriting, which are used by the industry’s professionals in economic capital modeling, such as chief risk officers and actuaries. It also provides the industry with a comprehensive breakdown of specific significant risks.

The data used within the study in order to compile the report is from 47 countries around the world, as well as primary business lines that reflect over 90 percent of the premiums for property-casualty insurance around the world.

The research provides a raking for the underwriting volatility around the world based on the business line and its region. This year’s study showed that property continues to be significantly more volatile than other primary lines.

It also showed that in Spain and Germany, auto insurance – the line that is the most stable – is just over half as volatile as property. In the United States, auto insurance is more than a third as volatile as property, and in France, it has about a quarter of the risk. The 2011 volatility parameters align well with the 2010 numbers, overall, though they have not yet taken into account the significant catastrophe activity that has occurred throughout this year.

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