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Managing uncertainty in a general insurance company

Published online by Cambridge University Press:  20 April 2012

C. D. Daykin  and
G. B. Hey
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Abstract

A cash flow model is proposed as a way of analysing uncertainty in the future development of a general insurance company. The company is modelled alongside the market in aggregate so that the impact of changes in premium rates relative to the market can be assessed. An extensive computer model is developed along these lines, intended for use in practical applications by actuaries advising the management of genera1 insurance companies. Simulation methods are used to explore the consequences of uncertainty, particularly in regard to inflation and investments. Some comments are made on the role of actuaries in general insurance. Alternative approaches to describing the behaviour of an insurance firm in the market are considered.

Keywords

General InsuranceModelsProfitVariabilitySolvency
Type
Research Article
Information
Journal of the Institute of Actuaries , Volume 117 , Issue 2 , September 1990 , pp. 173 - 277
Copyright
Copyright © Institute and Faculty of Actuaries 1990

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