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Use of Dynamic Financial Analysis and Financial Condition Reporting by United Kingdom General Insurers

Published online by Cambridge University Press:  10 May 2011

Y. Shiu  and
P. Moles
Y. Shiu
Affiliation:
Department of Business Administration, National Cheng King University, 1 Ta-Hsueh Road, Tainan, Taiwan., ext. 53300;, Tel: +886(0)6-275-7575, Fax: +886(0)6-208-0179
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Abstract

This paper presents the findings of a survey of the current Dynamic Financial Analysis (DFA)/Financial Condition Report (FCR) practices in the United Kingdom general insurance industry. An independent samples t test for non-respondent bias was conducted, and the results suggest that the respondent sample is representative of the survey population. The survey results revealed: (1) that the use of DFA techniques in the industry was limited; (2) that scenario testing was the most frequently used technique; (3) that the most common DFA application was the evaluation of reinsurance programmes; (4) that less than ten scenarios were run regularly; (5) that inflation was the most frequently modelled economic variable; (6) that the capability of asset modelling of general insurers was restricted; (7) that the most common method of liability modelling was to use all in force policies in aggregate; (8) that the most common projection periods in DFA and business planning were three years; (9) that the main reason for not using DFA techniques and producing FCR was lack of need; and (10) that views on whether a Guidance Note on FCR specifically for general insurers should be introduced differed.

Keywords

Dynamic Financial AnalysisFinancial Condition ReportGeneral InsurersPostal Survey
Type
Papers
Information
Annals of Actuarial Science , Volume 1 , Issue 1 , March 2006 , pp. 79 - 101
Copyright
Copyright © Institute and Faculty of Actuaries 2006

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