Machine learning – Automation of Claim Processing

Introduction Artificial intelligence can definitely help in the claims processing. As it often is with technology the key is to automate say 80% of the time/cost and then handle the remaining 20% manually. The reason being, of course, 100% automation is hard to achieve. Paperwork, manually written notifications, follow-ups, and underwriting are usually boring to do. Automation allows companies to reduce the cost that is spent on routine work and…

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Frequently Asked Questions – IFRS 17

Introduction Under the supervision of the IAA the below questions has been answered around the IFRS 17 regulation. It is an educational document on an actuarial subject that has been adopted by the IAA in order to advance the understanding of the subject by readers of the chapter, including actuaries and others, who use or rely upon the work of actuaries. Link to IFRS 17 Published Documents page. More questions…

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Solvency Ratios – SCR, MCR

The Solvency Capital Requirements and the related solvency ratios (SCR Ratio) describes the concept of having assets available to cover your liabilities. In other words, if you have more assets than liabilities then you are solvent. The requirement itself is an amount in the company's functional currency. The ratio is a percentage. Solvency Capital Requirement Since Solvency II came into force at 1 January 2016 the rules for required capital…

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Possible delay of IFRS 17?

Possible delay of IFRS 17? Recently voices have been raised in this regards. As a result Insurance Europe, the European insurance and reinsurance federation, has called for the new IFRS 17 standard to be reopened. And that the implementation of IFRS 17 is delayed by two years. The reason would be to address several underlying issues and allow time for companies to prepare. It said that the additional time would allow…

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Insurance Distribution Directive

This directive is a new regulatory regime for insurance distributors. It is effective as at 1 October 2018. The new regulation stems from EU's Insurance Distribution Directive - IDD. The IDD directive The directive adopted in 2016 seeks to improve consumer protection for insurance products. It is applicable to insurance intermediaries, insurance companies and online distribution. Information and transparency is key in the new regulation. In addition any conflicts of…

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Q&A on Regulation

EIOPA has published a new and updated Q&A on Solvency II regulation. It covers both the 2015/35 and 2015/2450. Contents as per below, Answers to (EU) No 2015-35 supplementing Directive 2009-138. Answers to (EU) No 2015-2450 - templates for the submission of information to the supervisory authorities. Answers to (EU) No 2015-2451 - templates and structure of the disclosure of specific information by supervisory authorities. Answers to guidelines on valuation…

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IFRS 17 – Insurance Contracts

Introduction IFRS 17 is fast approaching. Let's be ready. As a background IFRS 17 is replacing IFRS 4 on insurance contracts. The project has lived for some 20 years already. Find out what's it all about and how it will impact the insurance business. The practise around the standard will still have to evolve once it is adopted. That phase is usually driven by the key players in the market…

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Risk Free Rate

The Risk Free rate is considered the interest rate that can be achieved without risk, typically from government bonds. The actual rate varies depending on maturity and currency. In recent years it has been a low-rate environment in general which is reflected in the latest interest rates too. This low interest rate is generally a challenge for the insurance companies since part of their business model involves investment income. EIOPA…

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Premium rates – Pricing

Rate making, or insurance pricing, is the calculation of rates charged by insurance companies. The benefit of pricing is to ensure insurance companies are setting fair and adequate premiums given the competitive nature. The concept has many factors to consider. For instance Premiums should be set so that the company can afford to pay the claims, even in the long run. This is why companies also should consider expenses, cost of capital etc. Premiums should be…

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