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  #51  
Old 09-10-2014, 10:49 AM
Harbinger Harbinger is offline
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Cat modeling isn't sexy work. The majority of it is data scrubbing and once you have the data adequately massaged and scrubbed you import it into the model and hit "Run". Where cat-modelers differentiate themselves from their button pushing counterparts is understanding the models inside and out. By this, I mean they have a good understanding of the meteorological, geological and engineering aspects that went into creating the model. They can also adequately explain results and why certain structures have different damage ratios than other structures.
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  #52  
Old 09-10-2014, 12:11 PM
yonatan yonatan is offline
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Originally Posted by Idioteque View Post
Cat modelers are typically extremely well-versed in the main vendors' CAT modeling software (RMS, AIR, etc.), the current trends in major weather-related perils across the regions they are concerned with (Hurricanes, Tornadoes, Winterstorm, Earthquake), and are usually skilled at manipulating data in Access and Excel (the reason being to scrub insurer data for input into the models themselves).

Actuaries in reinsurance are the ones diving into the data and understanding the implications on pricing and reserving for the treaties themselves, which can encompass a wide range of insurer products. Working at a reinsurance broker, you get exposure to and need to comprehend a wide range of LOBs (workers' comp, excess casualty, property, marine, professional lines to name a few) and work with the broker to price and design reinsurance treaties on the clients' behalf (insurance company).

Broking actuaries tend to have the reputation in the reinsurance marketplace of painting a biased picture of the client when making assumptions with the data; since the data used in reinsurance is usually sparse, assumptions often need to be made to transform it into a usable form. Because of this, the reinsurer's actuary will come in with a higher "technical" price for a treaty (this price is based off an analysis of the potential losses to the treaty during the treaty period), the broking actuary will come in lower, and then they will hash out their assumptions until reaching an agreement in the middle. I don't think this is as much the case anymore as brokers have an incentive to provide a valid estimation to maintain their reputation in the marketplace.
Some brokers still consider the cedant making money off its reinsurance a "victory". It's also worth noting that often it's the broker's actuaries who design the treaty structure for the cedants.
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  #53  
Old 09-10-2014, 09:02 PM
FranklinB FranklinB is offline
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Originally Posted by yonatan View Post
For Excess, It tends to be a matter of weighing the rate you get based on experience vs exposure. Exposure is based on the company's profile; ie their results, where they write business and the type of business they have. Lower layers often have enough loss experience so you have to rely less on exposure. Middle layers have less loss history; so more credibility goes to the exposure rate. Cat layers with very little to no loss history are generally priced on a rate on line basis with the help of cat modelling software. But that is the purely technical part. One also has to qualitatively assess changes to the book of business or business environment in question and evaluate whether price increases/decreases are in order.

For proportional treaties, it's a matter of projecting ultimate loss ratios and seeing whether the commission structure will result in the desired profit
This is a great discussion. What happens if you want to price a treaty with an unique risk exposure that has no comparable exposure curves "out there" and you need to price a reasonably high layer that experience rating has little credibility?
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  #54  
Old 09-10-2014, 09:08 PM
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This is a great discussion. What happens if you want to price a treaty with an unique risk exposure that has no comparable exposure curves "out there" and you need to price a reasonably high layer that experience rating has little credibility?
You charge a high premium
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  #55  
Old 09-10-2014, 10:46 PM
Harbinger Harbinger is offline
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Some brokers still consider the cedant making money off its reinsurance a "victory". It's also worth noting that often it's the broker's actuaries who design the treaty structure for the cedants.
It's more often the broker who then goes to the actuary and says, "how does this look?"
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  #56  
Old 09-11-2014, 01:29 AM
yonatan yonatan is offline
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This is a great discussion. What happens if you want to price a treaty with an unique risk exposure that has no comparable exposure curves "out there" and you need to price a reasonably high layer that experience rating has little credibility?
It doesn't even have to be unique. A company that writes business all over the world would have to have hundreds of exposure curves, too many to keep up with. What I believe companies do is take the most similar exposure they have and scale it upward if it's more risky. If it exists, the facultative market could provide useful info as well.
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  #57  
Old 09-13-2014, 01:22 AM
FranklinB FranklinB is offline
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Thanks for answering.
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