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A GlobeRisk Perspective on Non Life Insurance

Whilst Non Life firms were not critically affected by recent stock market and bond market developments, they have faced their own issues. For example:

Broadly speaking, non life business falls into three categories:

With the exception of the first category, insurance risk management, particularly risk rating, acceptance underwriting and claims underwriting, is critical to performance unless a firm is operating from a low cost environment.

In recent years operating platform competition has become intense starting with telephone firms such as Direct Line, Internet based firms such as eSure and low cost selling strategies such as TESCO. Such competition is likely to continue for some time.

Whilst risk rating and overall insurance risk management has improved somewhat in recent years, it still falls some way short of banking standards, particularly in respect of using risk management capability to create competitive advantage. In some ways this is counterintuitive since for most non life firms risk management is much more critical to performance than is the case for banks.

Solvency2 is likely to change the sophistication of non life risk management for ever. In line with risk based regulation everywhere, there are incentives for firms that invest in good quality risk management. For non life firms risk rating models are the key. Unlike other financial services segments, in non life business improved risk rating drives directly through to improved risk acceptance and additional profitability.

Thus, unlike Basel2 where some banks put together their "response" at the last minute, non life firms have a large profit incentive to move quickly... and a large problem if they lag behind the pack. GlobeRisk sees an "arms race" developing in 2008 and 2009 as firms start to invest strongly in Solvency2 weaponry.

GlobeRisk has developed several consultancy services to assist Non Life Firms with the Solvency2 challenge

In respect of controls, governance and operating models, GlobeRisk services include

In respect of the extension to Solvency 2, GlobeRisk services include:

On a more traditional perspective, GlobeRisk services include:

From a Firmwide risk management perspective, GlobeRisk services include: