Papers
How to find the best reinsurance deal: The reinsurance efficient frontier explained
Reinsurance is a way of transferring some of the risk from the insurer to another party, called the reinsurer, in exchange for a premium. Reinsurance can reduce the insurer’s exposure to large losses, improve its solvency and capital position, and increase its risk-adjusted profitability.
At a crossroad: How to choose the right distribution for the time between deaths in Annually Renewable Term Insurance
An annually renewable term insurance is a type of term life insurance that guarantees the policyholder the ability to renew their coverage every year without having to reapply or take a medical exam.
ORSA: Aligning risk management and capital adequacy with business strategy and risk appetite
The own risk and solvency assessment (ORSA) is a powerful tool that enables insurers to assess their own risk profile and solvency position under various scenarios, and to align their risk management and capital adequacy with their business strategy and risk appetite.
How to manage and control operational risk in the insurance industry: Challenges, best practices, and tools
Operational risk is a type of business risk that arises from the potential failure or inadequacy of internal processes, people, systems, or external events that affect the normal functioning of an insurer. It can result in financial losses, reputational damage, regulatory penalties, or even business disruption.
The benefits and challenges of hedge accounting under IFRS 9: What you need to know
Hedge accounting is a method of accounting that allows an entity to reduce the volatility in its profit or loss or other comprehensive income caused by changes in the fair value or cash flows of certain financial instruments. Under IFRS 9, hedge accounting is an option, and management can decide whether to use it after fulfilling the criteria for recognizing the hedge.
Accounting for insurance business combinations under IFRS 17: Key concepts and challenges
Business combinations are transactions in which an entity acquires control of another entity or business, and they can have significant accounting implications for the entities involved. In this article, we will focus on two types of business combinations that are relevant for the insurance industry: (i) The merger and acquisition (M&A) of insurers; and (ii) The acquisition of a legacy portfolio.
The tail factor: A source of uncertainty and complexity in loss reserving
The tail factor is a key concept in actuarial science for estimating the reserve for long-tailed claims, such as workers’ compensation, asbestos, or environmental claims. These claims have a long settlement period, which means that the ultimate loss may not be known for many years after the occurrence of the event.
How to measure the fair value of derivatives: Beyond CVA and DVA
Counterparty credit risk is the risk that a party to a financial contract will fail to fulfil their side of the contractual agreement. This risk affects the fair value of the contract, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Sustainability reporting: Are you ready to embrace it?
The EU’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) are two new regulations that will change the way insurance companies report on their sustainability performance and impact. They are part of the EU’s efforts to achieve its climate and environmental goals, as well as to foster a more sustainable and resilient economy.
IFRS 17: A new era of disclosure for insurance contracts
IFRS 17 is the new accounting standard for insurance contracts that applies to periods that commenced on 1 January 2023. It aims to provide a single global comprehensive accounting model for insurance contracts and to increase the transparency and comparability of financial reporting by insurers. One of the key features of IFRS 17 is the disclosure requirements, which are intended to provide users of financial statements with relevant and useful information about the nature, amount, timing, and uncertainty of the cash flows from insurance contracts.
ALM in insurance: What it is; Why it matters; and How to do it better
Asset-liability management (ALM) is a way of managing the financial risks that arise from the mismatch between the assets and liabilities of an insurance company. It involves balancing the cash flows, returns, and risks of the assets and liabilities, as well as complying with the regulatory and capital requirements. ALM can help an insurer achieve greater efficiency, risk-adjusted profitability, and solvency in the short, medium, and long term.
Reinsurance framework assessment: Guide for direct insurers' actuaries
Reinsurance is a vital tool for direct insurance companies to manage their underwriting risks and capital. However, reinsurance also involves complex contractual arrangements, financial transactions, and regulatory compliance.
How AI is transforming the loss reserving process for CAT lines of business
Loss reserving for catastrophe (CAT) lines of business is a vital and complex task for actuaries and insurers. CAT events are infrequent, uncertain, and potentially very expensive, which poses challenges for estimating the ultimate losses and the associated risk margin.
Data governance in the insurance sector: Seven principles for success
Data governance is the process of ensuring that an insurer’s data is of high quality, secure, accessible, and used appropriately for its intended purposes. Data governance involves defining the roles, responsibilities, policies, standards, and metrics that govern the creation, collection, storage, analysis, and use of data.
The Merton Model and the WACC: A powerful combination to get the Kd right
The Merton model suggests that the intrinsic credit risk of an insurance company can be reached by modeling its equity as a call option on its assets. The model assumes that an insurance company will default on its debt if the market consistent value of its assets falls below the market consistent value of its liabilities.
Predictive analytics: A complement or a substitute for human judgment and expertise in P&C insurance?
Predictive analytics is a fascinating topic that involves using data and algorithms to make predictions about future events and outcomes. Predictive analytics can help P&C insurers make better decisions, optimize processes, and reduce risks.
The CFO of tomorrow: Mastering the art of navigating the complexity and uncertainty of the insurance industry
The role of the Chief Financial Officer (CFO) in an insurance company is evolving rapidly as the industry faces new challenges and opportunities in the digital era.
Corporate governance and operational resilience: Why they matter for insurers in a changing world
The insurance sector plays a vital role in the economy and society, providing protection and risk transfer for individuals, businesses, and public entities. However, the insurance industry also faces various challenges and risks, such as market volatility, cyber threats, regulatory changes, climate change, and pandemics. These challenges and risks can potentially disrupt the provision of insurance services and affect the solvency and reputation of insurers.
The actuarial function: the unsung hero of the POG process
The actuarial function is a key function in the product oversight and governance (POG) framework, which aims to ensure that the interests of customers are taken into account during the product design and throughout the product lifecycle.
Turning risk into value
Insurance-linked securities (ILS) are a type of financial instrument that allows investors to participate in the insurance market and earn returns based on the occurrence or non-occurrence of certain events, such as natural disasters, pandemics, or mortality changes.
Credit risk modelling under IFRS 17, IFRS 9 and Solvency II
Credit risk modelling is the process of quantifying the potential losses that an insurer may incur due to the failure or deterioration of its counterparties, such as debt issuers, reinsurers or banks. Credit risk modelling involves estimating the probability of default, the exposure at default and the recovery rate for each counterparty, as well as the correlation among them.
The power of data and analytics in the digital age
Data and analytics are essential for insurance carriers to gain a competitive edge in the market. Data and analytics can help carriers improve their pricing, underwriting, claims, risk management, customer service, and innovation.
How are you preparing for the digital revolution in insurance?
The enterprise value of an insurance company is the measure of its fair value; it reflects its ability to generate free cash flows for its shareholders.
How social inflation is threatening the insurance industry and what actuaries can do about it
Social inflation is a term that refers to the phenomenon of rising litigation costs and claim settlements that exceed the expected value based on economic inflation and actuarial assumptions.
VUCA in the insurance industry: Foe or Friend?
Global financial crisis, pandemic, geopolitical conflicts have been assailing the European Union (EU)’s economy for the past decade or so, creating an unparalleled volatility, uncertainty, complexity, and ambiguity (VUCA) ecosystem in the EU’s insurance industry.
KPIs and KRIs under IFRS 17 and IFRS 9
IFRS 17 and IFRS 9 are the new accounting standards for insurance contracts and financial instruments, respectively, that are effective since 1 January 2023 for the insurance industry. These standards introduce significant changes in the measurement, presentation, and disclosure of the financial and risk position and financial and risk performance of insurers.
How ESG can transform the insurance industry for the better
Insurers must start using ESG lens to enhance and in most cases revamp how they conduct their business.
On the “”E””, insurers must evaluate their current business and operating models, in order to reduce their carbon footprint, including across the value chain, upstream and downstream.
Insurance pricing in the age of AI: A game-changer or a headache?
Insurers can segment their customers into different homogeneous risk groups based on their risk profiles and characteristics, using clustering techniques. This can help insurers to understand and tailor their products, services, and pricing to each group, according to their behaviour and preferences.
I have a dream...
I have a dream that one day my insurer will not be a faceless corporation, but a trusted partner, a personal advisor, and a loyal friend, using human-like communication, empathy, and emotion from the insurer’s APP, based on my personality, mood, and context.
How to leverage IFRS 17 and IFRS 9 to create USPs for Solvency II
The article https://www.bafin.de/ref/19587768 from BaFin, the German insurance regulator, provides an overview of the role and challenges of internal models in the insurance industry, especially in the context of Solvency II.
Artigos de Opinião
A Governança Climática como elemento central da Gestão de Riscos nos seguros
Nuno Oliveira Matos defende que as obrigações impostas pelas alterações climáticas são uma oportunidade para as seguradoras melhorarem a sua resiliência e solvência.
IFRS 17 e 9: A Promessa de Melhorar o Relato Financeiro Está Cumprida?
Nuno Oliveira Matos pergunta se estamos dispostos a enfrentar a oportunidade, ou a ameaça, de reimaginar o papel das demonstrações financeiras na tomada de decisões informadas no setor segurador.
A Arte da Retenção no Setor Segurador
Nuno Oliveira Matos explica que nos seguros a lei da oferta e da procura não opera isoladamente. O atuário de pricing é um verdadeiro comercial porque reter clientes é crucial.
“Veni, Vidi, Vici”: A Gestão do Risco de Liquidez no Setor Segurador
Nuno Oliveira Matos justifica como uma gestão eficaz é a habilidade de enfrentar a incerteza e assegurar estabilidade, independentemente do contexto económico!
Gestão de Riscos no Setor Segurador: Para Além dos Indicadores Tradicionais
Nuno Oliveira Matos revisita os indicadores e métricas usados na gestão de risco pelas seguradoras. E questiona e conclui sobre a sua eficácia nos tempos atuais.
Tarifação Dinâmica: O Futuro do Seguro Automóvel
Nuno Matos levanta a questão das vantagens do acesso a dados de condução de veículos segurados para se obterem tarifas mais justas para os seguros automóvel.
Solvência 2.1: Como as Novas Regras Impactarão o Setor
Nuno Oliveira Matos, detalha os impactos que as novas regras de Solvência II terão nas empresas europeias. Reforça que maior transparência poderá representar vantagem competitiva.
A Maximização do Valor do Resseguro
Nuno Oliveira Matos defende que o resseguro não deve ser simples transferência de risco, mas antes um instrumento de inovação contínua e resiliência proativa. Um verdadeiro catalisador para o setor.
Solvência II e IFRS 17: Da Complexidade à Vantagem Competitiva
Nuno Matos, Sócio da Carrilho & Associados, SROC, defende que as empresas de seguros devem estar prontas para transformar a complexidade regulatória numa vantagem competitiva.
Como o Setor Segurador vai liderar o combate às consequências das mudanças climáticas
Nuno Matos, Sócio da Carrilho & Associados SROC, expõe toas as obrigações legais a que as empresas de seguros estão sujeitas. E também fala da obrigação moral do setor na redução do impacto climático.
O Papel Crucial do Setor Segurador na Transformação da União Europeia
Nuno Oliveira Matos, Sócio da Carrilho & Associados, SROC, analisou a Relatório Draghi e sintetiza as linhas mestras do que poderá devolver competitividade à Europa.