Determination of Motor Third Party Premiums in India
In India, motor third party insurance cover is risky, and one of the trickiest, covers in India. This is largely due to long tailed nature of the business and multiple parameter that affect it. As this is a form of social insurance, the premium rates are determined by the Insurance Regulatory and Development Authority of India (IRDAI). Considering the uncertainty involved in determination of premiums, IRDAI decided to avail the services of an external actuarial firm to determine premiums of various categories (approximate 35) of vehicles. We were selected for the said assignment twice in a row for two financial years.
Our role as a Consultant involved,
- Analysis of the industry wide past claims data of various categories of vehicles.
- Cleaning the data in order to make it compatible for estimation.
- Estimation of the premium rates for different categories of vehicles by applying actuarial methods.
- Suggesting improvements in the process of data collection and collation by the regulator.
- Suggesting introduction of new categories based on the current environment.
ACTUARIAL DUE DILIGENCE OF INSURANCE COMPANIES.
We have carried out due diligence of actuarial reserves of many general and health insurers based out of India and abroad.
Our responsibilities included,
- Estimation of actuarial reserves like IBN(E)R, PDR, URR etc.
- Analysis of adequacy of actuarial reserves.
- Analysis of process of estimating actuarial reserves.
- Check for adherence to various regulatory compliances with respect to the actuarial reserves.
- Test the financial condition of the Company with respect to its solvency position.
- Validating the solvency position if 1/365 method of premium recognition is considered.
- Validating the business plan of the Company for the future years.
- Validating the actuarial assumptions used for statutory reserves estimation.
Estimation of Appraisal value for Life Insurance companies.
Some of our life insurance clients needed to arrive at the fair valuation for the purpose of the issuance of stock option to its employees.
We were chosen as a consulting partner and our role included,
- Study of the business plan of the Company for next few years.
- Testing the reasonableness of assumptions used by the Company to arrive at Embedded Value.
- Calculating value of future new business through each channel.
- Estimation of the Appraisal Value of the Company
Actuarial Valuation of various employee benefits schemes for large public sector companies
We are the scheme actuary to many private and public sector companies locally & globally.
Central and State government undertakings in particular have many complex employee benefits schemes. Apart from many private multinational groups, we have provided employee benefits consulting services to various public sector undertakings like Steel Authority of India Limited (SAIL), Rashtriya Ispat Nigam limited, Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited, Council of Scientific and Industrial Research, The Oriental Insurance Company, Haryana Power Generation Company Limited, Container Corporation of India, Shipping Corporation of India, Bangalore Metro Rail Corporation, Mormugao Port Trust and many more.
Our work with organizations include,
- Analysis of the benefit structure of the various schemes.
- Assisting client with the assumptions setting based on the past trends and industry analysis.
- Preparing report as per the required accounting standards.
- Consulting client and their auditors on all aspects of the reports from actuarial technical to reporting disclosures.
Business projections and sensitivity analysis for the purpose of license (R1) application of insurance companies.
Some of the new general and health insurance companies were looking to apply for the license with the regulator to carry out the insurance business in India.
We got on board for,
- Chalking out a detailed business projection plan for the Company which involved analysis of the various channels through which the business would be sourced, the possible number of leads generation from each source and their conversion rates.
- Expenses incurred in sourcing the business from each channel.
- Manpower requirement planning.
- Analysis of the industry experience in setting the assumptions for average policy size through each channel, claims ratio, claims handling expenses etc.
- Estimation of the solvency position of the Company for each of the projected future years.
- Sensitivity analysis of the various assumptions used to project the future business.
Analysis of Motor Third Party insurance line of business for insurance companies.
Motor Third Party Insurance is a very critical and complex insurance in India. Since we are an expert in Motor Third Party insurance line of business we have carried out the analysis of the same for many of our general insurance clients
Our responsibilities included:
- Estimating Ultimate Losses for each category of the vehicles based on the past claims data as experienced by the private general insurers.
- Geography wise analysis of the loss ratios for various categories of vehicles.
- Carry out a frequency/severity analysis by splitting the claims into death, injury and property related claims.
- Estimating the loss ratios for next few years based on the recent court judgments and changes in the motor insurance environment.
Appointed Actuary / Statutory Actuary / Panel Actuary roles for various insurance companies across the globe
Saket Singhal, Founder & Actuary, acts as Appointed Actuary, Statutory Actuary, Panel Actuary for multiple insurance companies in various countries.
His role & responsibilities include:
- Periodic estimation of reserves which includes IBNR, UPR & Premium deficiency reserves (PDR).
- Periodic regulatory filing, determination of required solvency margin (RSM), available solvency margin (ASM) and solvency ratios.
- Preparation of financial condition report which includes overall commentary on LOB-wise loss ratios, expense ratios. Future business projections, risk management philosophy and policies, analysis of investment portfolios, analysis of reinsurance treaties etc.
- Experience analysis and analysis of utilization of reserves
- Estimation of economic capital and ALM exercise.
- Product development and product pricing.
- Preparation of various analytics for business development.
- Business planning.
In Nepal, majority of the non-life insurers & reinsurers work with us to carry out the Liability Adequacy Tests.
We assist them by,
- Testing the data supplied for the reasonableness.
- Estimating ultimate losses for each line of business.
- Estimating Incurred But Not (Enough) Reported reserves.
- Comment on the adequacy of the various reserves like IBN(E)R, PDR, UPR and URR as provisioned by the Companies.