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  #11  
Old 11-29-2018, 09:28 PM
Arlie_Proctor Arlie_Proctor is offline
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I've done the reserving analysis a lot of different ways. I've worked for a multi-billion dollar reinsurer who uses an Excel template with TM1 on the back end and I'm currently working with a smaller insurer who uses ResQ for the analysis. I've also put together byzantine mazes of linked spreadsheets for ad-hoc analyses when necessary.

The big questions you need to answer are:
1) what controls do you need?
2) what kind of security do you need?
3) how many analysts will have their fingers in the analysis and what kinds of risks does that pose with more bespoke Excel implementations?
4) what is your budget for technical reviews and peer reviews?

There is nothing inherently wrong with Excel as the platform when used by a very small group of experienced users. There are serious dangers using Excel when the number of analysts is large and some are relatively inexperienced.
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  #12  
Old 11-30-2018, 06:30 AM
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Originally Posted by Arlie_Proctor View Post
I've done the reserving analysis a lot of different ways. I've worked for a multi-billion dollar reinsurer who uses an Excel template with TM1 on the back end and I'm currently working with a smaller insurer who uses ResQ for the analysis. I've also put together byzantine mazes of linked spreadsheets for ad-hoc analyses when necessary.

The big questions you need to answer are:
1) what controls do you need?
2) what kind of security do you need?
3) how many analysts will have their fingers in the analysis and what kinds of risks does that pose with more bespoke Excel implementations?
4) what is your budget for technical reviews and peer reviews?

There is nothing inherently wrong with Excel as the platform when used by a very small group of experienced users. There are serious dangers using Excel when the number of analysts is large and some are relatively inexperienced.
1) Their governance seems ok, but they definitely need additional modelling flexibility which they dont have right now. If this happens, they will also need to implement new controls and governance over the new platform.

My view of this is that the client is mostly being driven by the need to implement IFRS 17. As it stands right now, their systems and processes are wholly inadequate for this, so they are trying to modernise their modelling platform with the view of then using this to be able to model the vastly more complex IFRS 17 requirements.

2) Not a huge issue. Can be fixed with authorised users and licenses.

3) They only seem to have a few in house technical people, but they have no real experience using a modelling platform (so we are also going to have to train them as well). I don't see this as a huge problem though, because you can manage the entire modelling process via access restrictions (analysts can only run and upload). The higher up the food chain you go, the more access you have.

4) Not sure here. This will involve some discussions with the client because this will be a long project, with the view that we can help them out with IFRS 17 (which would be lucrative) eventually, once we move them over to the platform. Might give the peer technical review (figure 100 hrs or so) at a discount for that reason.
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  #13  
Old 11-30-2018, 08:48 AM
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Then I delegate the work to my minions.
Sign of a good leader right there, I tell you what.

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P&C Reserving work is not complex
I know, right? I can't for the life of me understand why they pay me to do what a simple model could do with a press of a button.

Actually, I do agree that the traditional methods are not arithmetically/computationally complex, but that's not where the complexity lies in P&C reserving work.
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  #14  
Old 11-30-2018, 10:09 AM
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Sign of a good leader right there, I tell you what.



I know, right? I can't for the life of me understand why they pay me to do what a simple model could do with a press of a button.

Actually, I do agree that the traditional methods are not arithmetically/computationally complex, but that's not where the complexity lies in P&C reserving work.
"Minions" is just an affectation. They tend to like me because I am laid back, and rather interesting.

They don't have any exotic LOBs. If they did, I would have to get an outside expert to help me because I don't have the know-how to help them there.
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  #15  
Old 11-30-2018, 02:14 PM
itGetsBetter itGetsBetter is offline
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I work for a mid-sized (almost large) P&C carrier. We have some exotic LOBs. We did our reserve reviews in macro-enabled Excel workbooks that pulled data from SQL databases until we decided to buy Arius, a reserving software. This was motivated by increasing the granularity in our reserve segments. It has been somewhat challenging to adapt our SOX controls to the new program.
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  #16  
Old 11-30-2018, 08:14 PM
Arlie_Proctor Arlie_Proctor is offline
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Mentioning IFRS-17 in the initial query would have been a good idea. That requirement changes the situation somewhat (not a whole lot, but it is important).

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Originally Posted by The_Polymath View Post
1) Their governance seems ok, but they definitely need additional modelling flexibility which they dont have right now. If this happens, they will also need to implement new controls and governance over the new platform.

My view of this is that the client is mostly being driven by the need to implement IFRS 17. As it stands right now, their systems and processes are wholly inadequate for this, so they are trying to modernise their modelling platform with the view of then using this to be able to model the vastly more complex IFRS 17 requirements.

2) Not a huge issue. Can be fixed with authorised users and licenses.

3) They only seem to have a few in house technical people, but they have no real experience using a modelling platform (so we are also going to have to train them as well). I don't see this as a huge problem though, because you can manage the entire modelling process via access restrictions (analysts can only run and upload). The higher up the food chain you go, the more access you have.

4) Not sure here. This will involve some discussions with the client because this will be a long project, with the view that we can help them out with IFRS 17 (which would be lucrative) eventually, once we move them over to the platform. Might give the peer technical review (figure 100 hrs or so) at a discount for that reason.
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  #17  
Old 11-30-2018, 08:37 PM
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Mentioning IFRS-17 in the initial query would have been a good idea. That requirement changes the situation somewhat (not a whole lot, but it is important).
Please explain what changes and how. (I am unfamiliar with IFRS-17.)
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  #18  
Old 11-30-2018, 09:13 PM
Arlie_Proctor Arlie_Proctor is offline
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I'm going to be really brief here in the interest of my fingers. IFRS-17 is the new accounting standard applicable for insurance everywhere in the world except the US. IFRS-17 attempts (not very successfully) to make insurance accounting more compatible with other industries. On the balance sheet, loss reserves as we know them in the US are replaced by Liabilities for Incurred Claims (LIC). These are now discounted and adjusted for an explicit risk margin. That part of the equation is mostly within the purview of what we US actuaries consider in our reserve review processes. On the other hand, unearned premiums are completely replaced by a provision called the Liability for Remaining Coverage (LRC). The concept is similar to GAAP UPR less DAC, but more complicated. This part of the equation goes beyond what a typical US reserve review contemplates in that it needs assumptions about expenses/commission cash flow timing.

The real bugaboo in IFRS-17 is that the accounting standard assumes that insurance entities capture information on their cash flows at a level of detail that does not match reality. None of us track our actual cash flows in the level of detail implied by the standard.

Furthermore, the IFRS-17 standard, as written, does a very poor job of recognizing the link that should exist between subject business and reinsurance, resulting in some potentially bizarre gross vs. net results.

Anymore beyond that and you'll have to offer dinner and copious drinks in exchange for your questions.



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Please explain what changes and how. (I am unfamiliar with IFRS-17.)
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  #19  
Old 11-30-2018, 09:40 PM
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IFRS 17 is essentially Ambrosia for Consultancies.
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  #20  
Old 11-30-2018, 09:48 PM
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Originally Posted by Arlie_Proctor View Post
I'm going to be really brief here in the interest of my fingers. IFRS-17 is the new accounting standard applicable for insurance everywhere in the world except the US. IFRS-17 attempts (not very successfully) to make insurance accounting more compatible with other industries. On the balance sheet, loss reserves as we know them in the US are replaced by Liabilities for Incurred Claims (LIC). These are now discounted and adjusted for an explicit risk margin. That part of the equation is mostly within the purview of what we US actuaries consider in our reserve review processes. On the other hand, unearned premiums are completely replaced by a provision called the Liability for Remaining Coverage (LRC). The concept is similar to GAAP UPR less DAC, but more complicated. This part of the equation goes beyond what a typical US reserve review contemplates in that it needs assumptions about expenses/commission cash flow timing.

The real bugaboo in IFRS-17 is that the accounting standard assumes that insurance entities capture information on their cash flows at a level of detail that does not match reality. None of us track our actual cash flows in the level of detail implied by the standard.

Furthermore, the IFRS-17 standard, as written, does a very poor job of recognizing the link that should exist between subject business and reinsurance, resulting in some potentially bizarre gross vs. net results.

Anymore beyond that and you'll have to offer dinner and copious drinks in exchange for your questions.
Thank you for that explanation, Arles.

But that's enough; no dinner and drinks needed. And I wouldn't want you to expect me to put out.
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