limabeanactuary
05-06-2010, 10:27 AM
from an Academy task force:
http://www.actuary.org/pdf/finreport/role_of_the_systemic_risk_regulator.pdf
I'm going to pull out the promote-the-actuarial-profession bit:
The Actuary within the Federal Systemic Risk Regulatory Structure
Few single insurance companies are individually large enough to cause risk of systemic proportions. But if a similar course of action is pursued by several companies of sufficient system-wide risk concentration, systemic problems could develop. Therefore the staff of the SRR should include individuals with the expertise to review the reports and risk profiles of many different insurers to determine what combinations may pose real risk. This requires an ability to understand and then aggregate the work performed by company actuaries and to be qualified to do this work within that area of expertise (actuaries specialize in particular types of insurance: life, health, pension, or property/casualty).
Actuaries also may need to perform an analysis of potential insurance risks before those risks emerge. Below are three examples of risks that could require more complex analysis:
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Determining whether the consolidation of insurance administration in the hands of too few outsourcers could lead to systemic risk;
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Determining whether particular asset classes, albeit held at only small levels in any particular insurer, pose an unacceptable risk when aggregated at the national level;
��
Determining whether the insurance industry’s use of only a small number of reinsurers is trending toward the creation of systemic exposure.
This network of actuaries, creating a link between the federal regulator and the functional regulators as well as a network across the federal jurisdiction, will be able, in parallel with the NAIC, to support the federal SRR to ensure that the insurance industry continues to be appropriately regulated and avoids the systemic risk pitfalls that have befallen many other financial services companies and sectors of late.
http://www.actuary.org/pdf/finreport/role_of_the_systemic_risk_regulator.pdf
I'm going to pull out the promote-the-actuarial-profession bit:
The Actuary within the Federal Systemic Risk Regulatory Structure
Few single insurance companies are individually large enough to cause risk of systemic proportions. But if a similar course of action is pursued by several companies of sufficient system-wide risk concentration, systemic problems could develop. Therefore the staff of the SRR should include individuals with the expertise to review the reports and risk profiles of many different insurers to determine what combinations may pose real risk. This requires an ability to understand and then aggregate the work performed by company actuaries and to be qualified to do this work within that area of expertise (actuaries specialize in particular types of insurance: life, health, pension, or property/casualty).
Actuaries also may need to perform an analysis of potential insurance risks before those risks emerge. Below are three examples of risks that could require more complex analysis:
��
Determining whether the consolidation of insurance administration in the hands of too few outsourcers could lead to systemic risk;
��
Determining whether particular asset classes, albeit held at only small levels in any particular insurer, pose an unacceptable risk when aggregated at the national level;
��
Determining whether the insurance industry’s use of only a small number of reinsurers is trending toward the creation of systemic exposure.
This network of actuaries, creating a link between the federal regulator and the functional regulators as well as a network across the federal jurisdiction, will be able, in parallel with the NAIC, to support the federal SRR to ensure that the insurance industry continues to be appropriately regulated and avoids the systemic risk pitfalls that have befallen many other financial services companies and sectors of late.