A Practical Guide to Commercial

Insurance Pricing

Prepared by Alina Pettifer and James Pettifer

Presented to the Actuaries Institute

General Insurance Seminar
12 – 13 November 2012
Sydney

This paper has been prepared for Actuaries Institute 2012 General Insurance Seminar.
The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of
the Institute and the Council is not responsible for those opinions.

© Finity Consulting, The Warranty Group

The Institute will ensure that all reproductions of the paper

acknowledge the Author/s as the author/s, and include the above
copyright statement.

Institute of Actuaries of Australia

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t +61 (0) 2 9233 3466 f +61 (0) 2 9233 3446
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 A Practical Guide to Commercial Insurance Pricing

Table of Contents
1. Abstract ............................................................................................................................. 2
2. Introduction ....................................................................................................................... 3
3. An Overview of Commercial Insurance ....................................................................... 5
3.1. What is Commercial Insurance?............................................................................. 5
3.2. Key Roles in Commercial Pricing ............................................................................ 6
3.3. What is the Small-Medium Enterprise Segment? .................................................. 7
3.4. What is the Corporate Segment? .......................................................................... 8
3.5. Product Distribution and Policy Wordings ............................................................. 9
3.6. The Dynamics of Pricing in the Market................................................................. 11
4. Engagement with the Business ..................................................................................... 14
4.1. Translating Technical analysis into Business Outcomes ..................................... 14
4.2. Relationship with Claims ........................................................................................ 15
5. The Commercial Insurance Pricing Actuary and Data ............................................. 17
5.1. Why is Data Quality a Key Issue for Commercial Insurance? ........................... 17
5.2. Key data quality issues ........................................................................................... 18
5.3. Making Best Use of the Available Internal and External Data ......................... 19
6. Technical Pricing Methods ............................................................................................ 21
6.1. Generalised Linear Modelling ............................................................................... 21
6.2. Experience Rating................................................................................................... 22
6.3. Industry Rating ......................................................................................................... 23
6.4. Alternatives to Competitor Analysis ..................................................................... 26
6.5. Adding Value to a Corporate Insurance Portfolio ............................................. 27
6.6. Large Loss modelling .............................................................................................. 28
6.7. Rate Index ................................................................................................................ 30
6.8. Machine learning.................................................................................................... 31
6.9. Other Modelling ...................................................................................................... 31
7. Pricing of Long Tail Classes ........................................................................................... 33
7.1. Estimation of Ultimate Claims Incurred ................................................................ 33
7.2. Superimposed Inflation .......................................................................................... 34
7.3. Latent Claims ........................................................................................................... 34
7.4. Legislative Changes and Precedence................................................................ 35
8. Complexities around Premium in Commercial Insurance ....................................... 36
8.1. Seasonal Trends around the Sale of Policies ....................................................... 36
8.2. Premium Adjustments at Policy Expiry.................................................................. 36
8.3. Earnings Patterns ..................................................................................................... 37
8.4. Insurance Taxes ....................................................................................................... 38
8.5. Terrorism Reinsurance Cover ................................................................................. 38
8.6. Burning Cost Premium Model ................................................................................ 39
9. Conclusion ...................................................................................................................... 40

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 A Practical Guide to Commercial Insurance Pricing

1. Abstract
Over the past 30 years, Personal lines pricing has been very attractive area of
practice for pricing actuaries, as the characteristics of the portfolios align to the
requirements of statistical analysis. These include a large amount of data,
homogenous risks and a limited exposure to large losses. This has enabled actuaries
to deliver significant value to Personal lines insurers through technical analysis and
the development of sophisticated pricing structures.

The role of actuaries in Commercial insurance pricing is less established and there is
an opportunity for the profession to become an integral part of the Commercial
insurance industry. However this opportunity comes with challenges as a typical
Commercial portfolio will

 Have a greater variety of the types of risks being insured

 Have poor, scarce or incomplete data
 Be heavily impacted by large losses

The purpose of this paper is to provide practical guidance to actuaries currently

involved or looking to be involved in Commercial insurance pricing to ensure that
their work is targeted so that it delivers more effective business outcomes. This
includes recommendations on developing knowledge about the portfolio and the
wider market, the need to engage with the business and the application of
appropriate actuarial technical pricing methods to Commercial insurance.

Key Words: Commercial Insurance, Pricing, Underwriting, Data, Relationship

Management, Technical Pricing Methods, Long Tail

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 A Practical Guide to Commercial Insurance Pricing

2. Introduction
Over the past 30 years, actuaries have been heavily involved in the pricing of
Personal lines portfolios but have found the Commercial insurance portfolios to be
much less accessible. This is due to a number of characteristics of Commercial
insurance including but not limited to

 The large number of complex products and covers

 Policies being highly heterogeneous even within the same product
 Poor, scarce or incomplete data
 High level of underwriting judgment applied to pricing of individual risks
 Be heavily impacted by large losses

There is a significant opportunity for actuaries to add more value in the pricing of
Commercial insurance and this paper provides a holistic overview of how to
approach the pricing of a Commercial lines portfolio. The paper focuses on
providing the actuary with recommendations on how to positively influence the
business outcomes of the insurer by producing targeted analytical outputs. The key
recommendations in the paper are

 That the Actuary builds an in depth understanding of the Commercial portfolio so

that they are able to set more informed assumptions, better understand the
drivers behind the results of any analysis and be able translate the analysis into
commercial insights. This will require
 An understanding of the policy wording
 Spending time on an ongoing basis with the Portfolio Managers, Case
Underwriters and Claims Managers
 Having clarity over the strategic plans for the portfolio
 Understanding the overall dynamics of the market including the
relationship with intermediaries and the market cycle
 Understanding the impact that case underwriting has on the risks selected
in the portfolio
 That the Actuary works in partnership with the Portfolio Manager. This will improve
the quality of the analysis and the likelihood of the analysis being utilised to drive
business outcomes and will require
 Strong engagement with the Portfolio Manager throughout the technical
pricing process
 The Actuary being transparent over the assumptions made and provides
justification to support the assumptions made
 The Actuary being aware of the uncertainty around the result and
providing a sensitivity analysis based on the variability of key assumptions
 The Actuary to be proactive in presenting new ideas and analysis that
could help the Portfolio Manager achieve the portfolio outcomes
 That the Actuary builds an in depth understanding of the data within the portfolio
as the quality of data within Commercial insurance presents more challenges
compared to Personal lines where actuaries have been using and improving the
data over many years. Being able to understand and enhance the data asset

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 A Practical Guide to Commercial Insurance Pricing

will enable the Actuary to ensure that their analysis is built on solid foundations.
This will require
 Understanding the availability of key data fields and the quality of these
fields
 Being proactive around improving the data asset for analysis by cleansing
data available internally and accessing external data
 Taking a role as a data champion within the insurer
 That the Actuary adopts appropriate technical pricing methods which allow for
the characteristics of the portfolio. Some of the key characteristics are
 High proportion of large losses
 The use of experience rating to price large accounts
 The large number of industries
 IBNR / IBNER
 Level of Superimposed inflation
 The legal environment including legislative changes
 Latent Claims

The paper covers 7 main sections

 An Overview of Commercial Insurance – outlines the key concepts that the

pricing actuary needs to know about the Commercial insurance market
 Engagement with the Business – highlights the importance of engagement
with the business in being able to provide fit for purpose technical analysis
and provide commercially actionable insights
 The Commercial Insurance Pricing Actuary and Data – provides the actuary
with an overview of the key data issues within Commercial insurance and
how they can make the best use of the data available both internally and
externally
 Technical Pricing Methods - provides an overview of the key pricing methods
that are used within Commercial insurance portfolios
 Pricing of Long Tail Classes – identifies the key additional complexities that
underlie the pricing of the long tail classes
 Complexities around Premium in Commercial Insurance – highlights some key
characteristics around how premium is treated and earned within
Commercial insurance

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 A Practical Guide to Commercial Insurance Pricing

3. An Overview of Commercial Insurance

This section aims to provide the pricing Actuary with an overview of the main
features of Commercial insurance, including the roles of the Portfolio Manager and
the Case Underwriter, the key differences between the Corporate and Small-
Medium Enterprise segments of Commercial Insurance and the drivers behind the
market price.

3.1. What is Commercial Insurance?

Commercial Insurance refers to insurance policies that cover any business or
commercial activity and makes up around 40%i of the insurance market with the
remaining 60% being classed as Personal insurance.

Commercial insurance is sold to businesses of all sizes from small to medium

enterprises such as the corner milk bar or a local building (typically referred to as
Small-Medium Enterprise or SME) through to very large corporations such as the top
500 ASX companies (referred to as Corporate). We note that the definition of what
fits into each category can vary significantly by insurer.

We have grouped the key Commercial portfolios in the below table into three
segments - SME, Corporate and Speciality Classes based on the target customer for
the portfolio. A portfolio that is not typically targeted towards either the SME or
Corporate customers has been allocated to the Speciality Classes segment.

Small-Medium Enterprise Corporate Speciality Classes

Commercial Motor Fleet Workers’ Compensation
Business Packages ISR (Industrial Special Risks) Professional Risks
Farm Packages Stand Alone Liability Marine
Crop Construction
Domestic Strata Extended Warranty

Some of the above portfolios are sold in the market as a number of distinct products.
For example, the products within the Professional Risks portfolio include Medical
Malpractice, Directors and Officers Insurance and Professional Indemnity. Some
portfolios also may have a number of very distinct sections with different risk
characteristics. For example, a single Business Package policy may include Fire,
Public and Products Liability, Burglary, Machinery Breakdown, Consequential Loss,
Tax Investigation, Theft and Money, Employee Dishonesty, Glass Breakage,
Computer and Electronics and General Property sections.

Recommendation 1: That the Actuary reads the policy wordings and spends some
time with the Case Underwriters, Claims Managers and Portfolio Managers to ensure
they understand the products that they work on including the covers offered and
the policy characteristics that drive claims. This additional understanding will enable
the Actuary to set more informed assumptions, to better understand potential drivers
of analytical results and to better translate the analysis into commercially actionable
insights.

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 A Practical Guide to Commercial Insurance Pricing

The large number of very distinct sections offered under some Commercial products
can make it challenging for the Actuary to be across all of the analytical
requirements of the portfolio. For example, an Actuary would require experience in
natural perils, short tail commercial and long tailed commercial pricing to be able to
fully deliver the pricing requirements for a business package portfolio.

Recommendation 2: That the Actuary is aware of the skills that are required across
the portfolios that they have responsibility for, and seek specialist expertise as
required in order to best support the portfolio. Where specialist expertise is not
available, the Actuary should make the Portfolio Manager aware of the potential
limitations in the analysis

3.2. Key Roles in Commercial Pricing

In a typical Commercial insurer, there are three key roles which have responsibilities
for the different aspects of the pricing process. These roles are

 Pricing Actuary – has the responsibility for providing technical analysis to support
the strategic direction of the portfolio. This includes
 Calculating the technical premium which is the amount required to meet
the financial targets of the organisation at a granular level
 Providing recommended book premium changes and assisting portfolio
managers to understand the likely result of the proposed changes
 Monitoring of the key performance metrics of the portfolio including the
underlying profitability, movements in volumes and the impact of pricing
changes
 Portfolio Manager – has the responsibility for looking holistically at the portfolio
and uses financial and management information reports, actuarial advice and
an understanding of industry trends to make business decisions about the
strategy and pricing of the portfolio. The key responsibilities of the Portfolio
Manager include
 Developing and driving the overall strategy for the portfolio
 Setting the book premium for the portfolio; calculated by applying an
algorithm based on a number of risk characteristics. The book premium
takes into account the technical premium with an overlay based on
underwriting judgement and the state of the market
 Identifying target segments for growth
 Setting underwriting standards and auditing individual policies to ensure
that case underwriting is aligned with the standards
 Providing advice to Case Underwriters in relation to difficult or high risk
policies
 Monitoring the overall performance of the portfolio
 Case Underwriter – considers the risks inherent in an individual policy and makes
a judgement on whether the level of risk of the policy is acceptable, and if so
then sets the actual charged premium based on:
 The book premium set by the portfolio manager

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 A Practical Guide to Commercial Insurance Pricing

 The individual characteristics of the risk based on analysis of historical

information on the policy, an on-site investigation of the risks being insured
or surveys performed by Risk Engineers
 The relationship with the intermediary
Case Underwriting is significantly more common on larger and more complex
risks, with close to 100% of Corporate policies being case underwritten compared
to only a small proportion of SME policies.

To successfully implement a portfolio strategy, the three above roles need to have a
strong transparent relationship to ensure that there is a consistent view on the
strategic direction of the portfolio.

Recommendation 3: That the Actuary who is working on a portfolio that has a high
level of case underwriting spends some time shadowing a Case Underwriter to get a
better understanding of how the case underwriting process works. In particular,
what the Case Underwriter considers on an individual policy level as part of the risk
acceptance process. This will provide the Actuary with a better understanding of
the risk drivers of the portfolio and an end to end understanding of the pricing
process.

Recommendation 4: That the Actuary considers the level of discounting in the

portfolio when recommending changes to book premiums based on technical work.

3.3. What is the Small-Medium Enterprise Segment?

A portfolio in the Small-Medium Enterprise (SME) segment of the market is likely to
have a number of characteristics which are similar to the standard Personal
insurance portfolios. These characteristics include

 Large amounts of data

 Reasonable data quality
 Automatic Premium Rating
 Limited Case Underwriting
 Limited Facultative Reinsurance
 Standard product wordings that may be customised by distributor or to the
target market rather than to each individual insured

As such, many of the standard actuarial pricing concepts and techniques that are
used for personal lines are also be able to be applied to the SME commercial
portfolios with only minor modification.

For some SME portfolios, a strategic decision may be made, in alignment with the
insurer’s risk appetite, to case underwrite a small sub-set of policies which exhibit a
high level of risk typically identified by the industry or geographic location of the
policy. As the Case Underwriter is likely to select the better risks in the segment, the
loss ratio performance of the segment may be better than expected based purely
on the risk characteristics

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 A Practical Guide to Commercial Insurance Pricing

Recommendation 5: That the Actuary work with the Portfolio Manager to form a
shared understanding of how the level of case underwriting on a segment has
impacted the historical performance of the segment and that this is taken into
account in their pricing recommendations. For example, it may not be viable to
grow a highly case underwritten segment of a portfolio without relaxing the
underwriting standards applied to the segment, potentially resulting in a significant
deterioration in the loss ratio of the segment.

Recommendation 6: That the Actuary encourages the capture of data which

identifies whether a policy has been case underwritten, who has case underwritten
each policy and their level of underwriting authority at the time they underwrote the
policy. This information can be used to

 Enable the monitoring of case underwritten vs. automatically rated business

with regards to business performance and renewal rates
 Allocate more expenses to policies that have been case underwritten to
enable sharper technical prices.
 Identify the correlation between discounting and portfolio performance at a
Case Underwriter level
 Understand if there is a differential in performance by Case Underwriter which
may be due to a skill gap
 Understand whether the Case Underwriters are discounting within their
underwriting authority

3.4. What is the Corporate Segment?

The Corporate segment relates to the Commercial insurance policies sold to very
large corporations such as the top 500 ASX companies. The insurance needs and
the risk exposures of these businesses can be very different and coupled with large
insurance premiums has meant that insurance companies typically offer more
tailored products and adopt a different underwriting and pricing approach for the
Corporate segment. Some of the key differences between the Corporate and the
SME segments which have a significant impact on the pricing and the financial
performance of this segment are:

 A very high level of case underwriting for Corporate businesses, which can
result in exclusions or high deductibles for risk exposures which are considered
to be undesirable. This may mean that two large businesses of similar size
operating in the same industry may have a very different insurance risk,
depending on the coverage, limits and exclusions placed on each policy.
This also may be reflected with a significant premium adjustment from the
standard book premium to allow for the individual risk of the insured. As such,
the performance of a portfolio is heavily driven by the skill of the Case
Underwriters.

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 The quality of the data is significantly worse for the Corporate segment than
for the SME segment for the following reasons
 The limitations of the core insurance system to record all of the relevant
risk information
 Corporate risks are manually rated, so missing or incorrect information
will not have a direct impact on the premium charged
 The large number of individual risks that could be insured under a single
Corporate policy making it administratively expensive to enter all of the
information
 Corporate businesses generally have a lot more capital and hence are able
to retain more insurance risk which is reflected in greater claim deductibles or
aggregate deductibles. For some Corporate portfolios, the majority of claim
costs are therefore likely to come from infrequent large claims with the
insured retaining the smaller or working claims
 A range of complex and unique businesses which mean that the type of
claims observed in the past are often not reflective of the types of claims
which may occur in the future. It is therefore challenging to form a view
about price by analysing portfolio level historical claims experience
 Some Corporate policies will have a gross written premium in excess of $1
million. Thus the writing of a single policy may have a material impact on the
overall size and viability of the portfolio. When the market premium is at an
unprofitable level, the insurer needs to balance whether it is better from a
long term perspective to retain the business and potentially take a loss during
a soft market cycle, or to reduce the size of the portfolio thus reducing the
expense base for the portfolio
 A high level of reinsurance on Corporate portfolios. On some individual
policies, this could be in excess of 90% of the gross premium and can mean
that there is a significant difference between the net and gross performance
of the portfolio

Recommendation 7: That the Actuary understands the dynamics of the Corporate

insurance market and the implications on actuarial pricing. Section “6.5 Adding
Value to a Corporate Insurance Portfolio” provides some examples of Corporate
specific pricing techniques

3.5. Product Distribution and Policy Wordings

Only a small proportion of the Commercial SME market is sold direct to the insured,
with around 80%ii sold through brokers, authorised representatives, underwriting
agencies and other intermediaries. Over the past 20 years, the consolidation of
brokers and the growth in the broker cluster groups has resulted in brokers having a
greater influence over the products they offer their customers.

Recommendation 8: That the Actuary is aware of the market dynamics of selling

insurance through an intermediary and how this impacts the ability of the insurer to
make pricing changes or to collect additional information about the risk.

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Most of the broker cluster groups and major brokers have drafted policy wordings for
the larger portfolios and require insurers to comply with the wordings in order to
simplify the processes of the broker and to provide the broker with a competitive
advantage. The differences in the policy wordings can have a significant impact on
the overall claims cost of the policy. To illustrate the point, we have compared the
wording around peak period increases or seasonal increases in cover from the
Money section in the Business Package policy for ANZiii to the Steadfast policy coveriv
both underwritten by QBE.

 The clause in the ANZ policy wording increases the sum insured taken out on
the section by 50% for 60 days before Christmas Day, 30 days before Easter
Sunday, for bank holidays and a few days after each of these periods up to
the next banking day.
 The clause in the Steadfast policy wording has a 50% increase on at least 126
days around Christmas and Easter, with an additional 49 days for a festive,
religious or ethnic celebration as well as the lesser of an extra 100% or an
extra $75,000 for bank holidays up to the next banking day.

This example only relates to a single clause on a small section of the policy, but
illustrates the differences that do exist and which, over a whole policy wording, can
have a material impact on the overall claims cost. Similar differences also occur in
the wordings between different insurers.

Recommendation 9: That the Actuary

 Understands the proportion of the portfolio insured under each of the

different wordings and where this information is captured in the system
 Has discussions with the Portfolio Manager to gain an understanding of the
most significant differences between the wordings and the expected impact
of these differences on claims costs
 Includes a flag into any modelling to identify the different wordings

Intermediaries can also create schemes which are typically tailored to meet the
specific insurance needs of companies in a particular industry or members of a
profession or organisation. Schemes are available across most of the Commercial
lines of business but are very common in the Professional Risks product where
professional organisations will often set up a scheme for their members. In general
schemes will have some or all of the following

 Specific policy wordings to ensure that the policy is more applicable to the
target group
 Preferential pricing over a similar standard product sold by the insurer due to
the collective buying power of the scheme
 A strong oversight from the intermediary limiting pricing changes and impact
to the end customer
 Guaranteed acceptance of cover for end customers who meets predefined
guidelines

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Recommendation 10: That the Actuary understands whether the difference in the
policy wordings, price and risk acceptance of each scheme to the remainder of the
portfolio is such that the scheme should be excluded from the analysis of the
portfolio to ensure that the scheme does not skew the analysis of the portfolio.

Recommendation 11: The actuary should also be proactive around being involved
in the pricing of the larger schemes including understanding of their underlying
experience and contribution to expenses.

3.6. The Dynamics of Pricing in the Market

The actual premium that is charged for a Commercial insurance policy is typically
based on a combination of analytics, relationships and judgements by the Actuary,
Portfolio Manager and Case Underwriter and the amount charged can vary
significantly depending on how insurers approach the pricing process. Some of the
factors that drive this variation include

 Different assessment of profitability: Different methodologies used by insurers to

measure the profitability of a portfolio such as
 Using the profit and loss account
 The actual current year experience, or
 An assessment of the underlying experience.
These methods can provide a different view of the profitability of a portfolio due
to a difference in the treatment of
 Prior Year Releases which have had a significant impact over the last 10
years on the Commercial long tail classes
 Profit and Loss – Included.
 Current Year Experience – Excluded
 Underlying Experience – Excluded
 Natural Peril Events and Large Claims where the actual experience is
typically very volatile and is likely to be significantly different to the
underlying experience in any one year.
 Profit and Loss – Actual experience
 Current Year Experience – Actual Experience
 Underlying Experience – Long term average view
Thus two insurers with the same experience may then have a very different view
of the profitability of a portfolio depending on the methodology used. This
different view is likely to then lead to different pricing decisions
 Different assumptions in technical pricing: There are a number of factors which
can result in different but valid assessments of the technical premium. These
reasons can include
 Differences in Corporate Strategy – the level of capital adequacy, target
return on capital, investment strategy and level of expenses will all impact
the premium charged to the end customers
 The heterogeneity in most Commercial portfolios and the highly
fragmented market can result in two insurers having seen significantly
different profitability in the same portfolio

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 Different assessments of the frequency and size of infrequent events such

as large claims, natural peril events or latent claims.
 Policy wording differences between insurers or in the level of case
underwriting can result in differences in the claims experience.
 The allocation of IBNR/IBNER, expenses and reinsurance costs to a portfolio
requires a high level of subjectivity. A different allocation methodology
may change the perceived profitability of the portfolio.
 Growth targets: It is much easier for front line staff to understand and influence
the achievement of targets based on written premium compared to targets
based on profitability. This can result in unprofitable business being bound to
achieve gross written premium targets
 Insurance Pricing Cycle: The market price of Commercial insurance is highly
driven by the Insurance Pricing Cycle.

Hard Market
Hard Market
Begins
•Prices stop rising
•Underwriting
standards improve •Insurers making
excess profit
•Premiums rise sharply

Soft Market Begins

Soft Market •New insurers enter
•Investors become the market
nervous •Prices drop to retain
•Insurers make lower market share
than target returns •Underwriting
standards drop

The Insurance Pricing Cycle is much more apparent in the Corporate portfolios in
part due to it being easier for capital to enter this market either via an overseas
insurer or through Lloyd’s syndicates. When the market is soft, the insurer may
focus on retaining market share to the detriment of profitability. This may be an
explicit business decision as moving in and out of the market with the cycle is
likely to impact relationships with intermediaries.
 Product Strategy: The strategy developed by the Portfolio Manager can have a
high level of influence on the setting of the price for a portfolio. For example, a
Portfolio Manager may have a strategy where a product is sold as a loss leader in
the market.
 Existing Relationships: As Commercial insurance is typically sold by
intermediaries, the intermediaries can often place pressure on insurers to provide
discounts on premium either on an individual policy basis or across a group of
policies. The insurer will consider the size of the intermediary and the strength
and length of the relationship before agreeing to any discount.

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Recommendation 12: That the Actuary understands and communicates to senior

management how the overall technical premium and thus the competitiveness of
the organisation is impacted by the differences in corporate strategy between the
insurer and their competitors.

Recommendation 13: That the Actuary have a strong understanding of the different
metrics that are being used to measure profitability across the organisation, what
each metric is showing and to explain to senior management the reasons for the
difference. This will promote a consistent view of profitability across the insurer and
provide a basis for informed decision making.

Recommendation 14: That the Actuary works with the Portfolio Manager to develop
a philosophy for the pricing of the portfolio which is then agreed with senior
management to provide a clear direction as to how the different parts of the market
cycle will be addressed. This will need to include:

 How profitability will be measured for pricing and monitoring purposes

 The target profitability over the whole insurance cycle and the minimum
target profitability at the softest part of the cycle
 The minimum level of underwriting standards that will be maintained across
the cycle and will not be breached to achieve written premium targets in the
softest part of the cycle
 Identifying the profitable segments to retain and the unprofitable segments to
shed as the market softens in price
 A clear customer value proposition which is communicated to Business
Development Managers and Case Underwriters so that they are aware of
what value the insurer can bring to the intermediary and end client rather
than purely focusing on price
 Understanding whether there is the opportunity to improve the offering to an
end customer by providing an additional section or cover at a discounted
premium instead of a reduction in price.

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4. Engagement with the Business

For a pricing Actuary to maximise the business value achieved from their analysis,
they need to have strong relationships across the insurer. This will enable them to
better support the business strategy by providing relevant and fit for purpose
technical advice, improve the quality of the technical analysis by incorporating
information from the wider business and translate the technical analysis into
commercially actionable insights.

4.1. Translating Technical analysis into Business Outcomes

A key part of the role of an Actuary working in pricing is to be able to translate
technical analysis into commercially actionable insights and to help drive business
decisions which lead to profitable outcomes. This can be challenging to achieve
due to the nature of the Commercial portfolios as discussed in the earlier sections.
The following recommendations detail specific actions that actuaries can take to
maximise the value that the organisation is able to obtain from their skill set.

Recommendation 15: That the Actuary spends time on an ongoing basis with the
Portfolio Manager to understand the concepts around the portfolio, the strategy for
the portfolio, the competitive environment and the portfolio target outcomes to
ensure any analysis completed is fit for purpose.

Recommendation 16: That the actuary engages with the Portfolio Manager
throughout the technical pricing process, soliciting input and feedback in relation to
the claims, premium and business mix trends that have been observed in the
portfolio. As part of the engagement, when commencing any analysis the Actuary
should have a detailed kick off meeting with the Portfolio Manager to cover

 Business outcomes that are to be achieved out of the analysis

 Known data quality issues
 Changes in the business mix of the portfolio
 Unusual accounts in the portfolio which may distort the results
 Significant changes in either policy wordings or case underwriting standards over
the analysis period
 Changes in the insurance environment that could impact the product
 Correlations between segments in the portfolio

Recommendation 17: That the Actuary appreciates that the nature of Commercial
insurance means that any analysis is not an exact science and that they are aware
of the limitations and uncertainties of their analysis and do not over sell the results as
the one true answer.

Recommendation 18: That the Actuary is transparent on all assumptions made in the
analysis, provides justification to support the decisions made and clearly identifies
the assumptions which have the most impact on the final result. This will give the
Portfolio Manager the opportunity to challenge the assumptions behind the analysis
and will not only lead to a better quality of output but will also improve the likelihood
of the analysis driving business decisions.

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Recommendation 19: That the Actuary provides the Portfolio Manager with a
sensitivity analysis of the final result based on the variability of key assumptions.
Examples of key assumptions may include:

 The level of superimposed inflation

 The frequency of large losses
 The impact of an economic downturn.

Recommendation 20: That the Actuary provides the Portfolio Manager with
actionable insights such as identifying profitable and unprofitable segments rather
than just a high level view of profitability

Recommendation 21: That the Actuary is proactive in presenting new ideas and
analysis which could help the Portfolio Manager to be successful in achieving the
portfolio outcomes. It is likely that the Portfolio Manager will not have a full
awareness of what business decisions can be enhanced through the use of
technical analysis and the Actuary should to take a lead role in identifying and
suggesting where they could add most value.

4.2. Relationship with Claims

In addition to having a strong relationship with the underwriting side of the insurer, it
is also valuable for the Actuary to have a close relationship with the Claims team.
Key areas where claims can impact the technical analysis include:

 Changes in Claims Management: Changes in claims processing can have a

significant impact on claims trends. As such, it is very important for the Actuary to
be aware of the changes and to make appropriate allowances for them in any
pricing analysis. Some examples of claim processing changes that may impact
the pricing analysis include:
 Changes in case estimation procedures which can have a particularly
significant impact on the analysis of Long Tail portfolios. For example, a
move from estimating based on a most likely outcome to the mean of all
outcomes could be extremely significant for a claim undergoing litigation.
 Changes in claim staff can impact indemnity costs as experienced Claims
Managers are better at minimising the overall cost of claims.
 Qualitative Feedback: Provide qualitative insights as to what may be driving the
portfolio level trends. For example Claims Managers may be able to assist in
 Estimating the impact of legislation changes – forming a view about the
cost increases/savings as a result of a legislation change by sense
checking the actuaries modelling assumptions against their experience
 Identifying drivers of inflation and superimposed inflation – identifying
drivers of claim costs which are not recorded in the data such as an
increase in medical costs in a Workers’ Compensation portfolio due to the
increased use of a particular medical procedure

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 Sense checking technical analysis – Claims Managers may be able to

provide insights about the drivers of the claims trends, for example why
certain industries have a large number of certain type of claims
 Understanding the impact of post-catastrophe claims inflation – both for
claims directly caused by the catastrophic event and for those not part of
the catastrophic event as these claims costs may increase due to the
diversion of resources towards the catastrophic event.
 Early Trend Identification: Help to identify claim trends before the trends are
clearly evident in the data to enable the insurer to address the issue early and
respond through case underwriting, policy wording or pricing changes. For
example
 An increased volume of similar type of liability claims from a particular
legal firm may indicate a new focus area for litigation
 An increased number of claims incurred due to a particular clause of the
policy wording
This is particularly relevant for long tail portfolios as it can take many years before
trends are visible in the data.

In addition, analysis undertaken by the Actuary may add value to claims. For
example significant changes to the portfolio mix may have an impact on the
number and type of claims that the Claims Managers would expect to see in the
future.

Recommendation 22: That the Actuary invests time in developing a strong ongoing
relationship with the Claims Managers in order to provide both better technical
pricing and better decision support for the insurer.

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5. The Commercial Insurance Pricing Actuary and Data

The aim of this section is to highlight why data quality in Commercial insurance is a
key issue for the pricing Actuary and how to make the best use of the available
internal and external data.

5.1. Why is Data Quality a Key Issue for Commercial Insurance?

Historically, there has been a limited focus on the quantity and the quality of data
that has been collected on Commercial portfolios. This can result in limitations
around the analysis as well as the pricing Actuary needing to spend a significant
amount of time addressing data issues. The poor data quality in Commercial
insurance is due to a number of factors which include

 Commercial insurers tend to run on legacy systems which may not have data
validation rules resulting in erroneous or missing entries
 A large proportion of Commercial insurance policies are sold through brokers
who aim to minimise their administrative cost and any inconvenience for their
end client and will push back on the collection of any additional fields or the
clarifications of data errors
 As any investment in analytics and management information has not been a
priority for Commercial insurance, there has been less incentive for the insurers
to have had a focus on data quality
 A long lag time between implemented improvements in data collection and
the ability to see clear business outcomes, resulting in a lack of urgency in
making any improvements

Although data governance is not a core skill of an Actuary, they are heavy users of
information and delivering more detailed and accurate analysis is likely to require an
investment of time in this area.

Recommendation 23: That the Actuary takes a role as a data champion for the
organisation. They should not own the data issues but instead take an active role in
driving improvements in the quality of the data collected. This may include:

 Building a strong relationship with the area that has ownership of data
governance in the organisation. If this is not clear, then it is worthwhile
facilitating the formation of a data governance committee
 Justify the importance of a new data field by presenting analysis which shows
a clear business outcome that could be achieved if the data was collected.
This could be achieved by collecting information on a sample of policies and
showing a link between the rating factor and claims
 Building support at an executive and senior management level around the
value of having a credible data asset
 Identify and agree key fields with senior management to focus on from a
data quality perspective. Including statistics on the collection and accuracy
of data in the KPIs of the staff who collect and process the information is a
suggested way of driving change.

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The level of involvement that the Actuary will have in ensuring that the data asset
enables detailed analysis of Commercial portfolios, will depend on the overall
maturity of the business intelligence function. In an insurer with a highly mature
business intelligence function, built considering the needs of the Actuary, the
Actuary will be mainly a customer of the data asset. In an insurer with a lower level
of maturity, the Actuary may need to spend a significant amount of time ensuring
that a data asset exists which meets their needs.

Recommendation 24: That the Actuary balances any necessary investment in data
against their key role in pricing

5.2. Key data quality issues

Poor data quality can have a significant impact on the credibility of any pricing
analysis. This section highlights some of the key data issues that are common in
Commercial insurance portfolios and how to identify them in the data.

 Bulk entered policies or claims – where policy and claims information is

aggregated before being entered into the system. These bulk entered policies
and claims can distort any models built on the portfolio. They can sometimes be
identified by:
 Checking for policies which have a much larger sum insured or premium
than the average across the portfolio
 Checking for policies with an abnormally large number of claims
 Investigating large claims to ensure that they are from a single source
 Asking the Portfolio Managers and the distribution area if they are aware
of are any bulk policies or claims
 Late processing of policies – where there is a delay in processing policies and
they are not entered onto the system for up to 3 months following their
attachment date. This delay is more apparent for larger risks and can result in a
distorted view of the business attaching in the past 2-3 months. For example, the
policies attaching in the June quarter as at July will look like they have a
significantly lower average premium compared to the previous year.
 Structured data fields not being available – for key factors such as industry code,
excess, sum insured or limits of indemnity. This information may be included as a
free form text field or not entered in the system
 Data entry not being at an individual risk location – resulting in an inability to
understand the total number of locations, the sum insured at each of these
locations, the level of concentration of risk or the susceptibility of these locations
to natural peril events
 No Policy Wording Indicator – providing a clear means of identifying the specific
terms and conditions that are covered by the individual policy
 No Case Underwriter flag – identifying that the risk has been case underwritten
 No Notification flag – identifying open claims that are only notifications. Open
notifications are particularly relevant for the Liability, Professional Risks and
Workers’ Compensation portfolios

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Recommendation 25: That the Actuary spends some time prior to conducting any
pricing analysis on understanding the data quality of the portfolio. This may include
excluding any policies or segments of the portfolio which have poor data quality

Recommendation 26: That the Actuary documents any material limitations of the
analysis resulting from any data quality issues identified and sense checks any
analysis against the Portfolio Manager’s understanding of risk exposures.

Recommendation 27: That the Actuary is careful in considering any form of analysis
which incorporates policies with a policy attachment date in the most recent 3
months as there could be policies which have not yet been entered in the system
which could result in the analysis being incorrect.

Recommendation 28: That the Actuary is heavily involved in the implementation of

any new policy or claims systems in the organisation to ensure that the necessary
fields are collected for analysis and have the appropriate levels of data quality
checks on entry.

5.3. Making Best Use of the Available Internal and External Data
The current quality and volume of data available for many Commercial portfolios
may limit the complexity and credibility of the pricing analysis that is able to be
performed. However, there are many ways that the Actuary can enhance the
existing data asset through the better use of internal data or the sourcing of data
from an external resource. Some examples of approaches to improve the data
asset are

Internal Data
 Portfolios which have similar characteristics can provide a starting point for
assumptions. For example, a claim size distribution for the bodily injury claims
from the liability section of a small portfolio could be based on the claim size
distribution for the bodily injury claims for the whole insurer.
 Text mining techniques can be used to extract structured data from the free form
data. This could include
 Extracting information about the policy wording or sub limits on the policy
from the free form entry fields
 Extracting information around the cause or nature of loss for each claim
 Splitting Liability claims into Bodily Injury and Property damage claims
 Identifying Liability claims coming directly from labour hire or being
recovered from one of the Workers’ Compensation schemes
 Splitting property water damage claims into those caused by flood and
those caused by burst pipes
 Information captured on systems other than the core system
 Risk Engineers are often engaged in Corporate insurance to assess the risk of
different accounts and provide information back to the Case Underwriters. This
information is typically kept on a paper file but could be converted into a series
of subjective scores to be used to aid pricing and monitoring of the portfolio.

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External Data
 Using external industry data to enhance the volume of information available.
This may include the APRA National Claims and Policy Database or the ISA
database and will provide the insurer with a wider base of data in order to
 understand market share by key segments
 model large claims
 compare overall profitability to the market
 ABS Statistics around the financial state or overall size of each industry. Census
data can also provide information about regional characteristics to support
geospatial analysis
 Reinsurers and reinsurance brokers will often provide additional services to their
clients that may include information around large claims or natural peril
experience.
 External data providers such as Veda and Dun and Bradstreet have information
available for sale for each business in Australia including
 Industry code
 Number of employees
 Time in business and Incorporation date
 Business size
 Turnover
 Financial behaviours including credit profile
This information can be used to cleanse existing fields, to providing additional
factors or even as a database to auto-fill factors in the rating calculations. In
addition, the external data providers have detailed information around the
demographics of particular areas or the characteristics including total number of
businesses and total turnover by ANZSIC.
 Geographic data exists in commercially available databases which contain over
200,000 fully geocoded points of interest which could be combined with the
address data on each individual risk to create additional factors which have
been hypothesized as a driver of claims experience – for example the distance
to the nearest fire station or the number of pubs located within in a 1 kilometre
radius.

Recommendation 29: That the Actuary considers what additional information

may be available both within the insurer and in the external market to improve their
analysis and to obtain further insights that may support the business strategy.

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6. Technical Pricing Methods

There are a number of technical pricing methodologies that can be used by a
pricing Actuary in a Commercial insurer. This section aims to provide an overview of
the concepts behind each of the key methodologies, how they can be
implemented in practice and any key issues that are relevant to the Commercial
insurance portfolios.

6.1. Generalised Linear Modelling

Generalised Linear Modelling (GLM) is a standard technique that is used by
Actuaries working in the pricing of Personal lines. This technique can also be used to
model working losses in the Commercial SME space. However, GLM modelling is
both data and time intensive and therefore may be less suitable for small portfolios,
small insurers or Corporate portfolios with limited homogenous data.

Recommendation 30: That the Actuary considers whether a GLM is the appropriate
modelling methodology for the Commercial portfolio, taking into account the
following complexities

 Modelling structure – how to best segment the portfolio for modelling purposes,
including understanding the covers and claim types that are covered under the
product and the types of risks written. For example:
 For Commercial Property, the Actuary may want to consider separate
claim type models (Fire, Theft, Accident and Weather) for each of the
covers (Buildings, Stock and Contents).
 For Commercial Motor, the Actuary may build a separate GLM for sedans
and utes but develop a simpler model for large trucks due to the low
frequency, high severity nature of the claims on this segment of the
portfolio.
The Actuary needs to also consider the current and proposed book rating
algorithm and how the insurer will implement the findings from the statistical
model in modifying the book premiums.
 Model fit – the nature of Commercial insurance means that the impact of risk
drivers on the claims performance is often less evident and the model does not fit
experience as well as would be generally seen in a model on Personal lines. As
such, it is very important to not just have the data drive the modelling decisions
but to utilise judgement and underwriting input. This could involve including
factors in the model even if they are not statistically significant if the results are
consistent with those from a qualitative perspective.
 Business mix changes – particularly if the modelling period is long and the
company has had a strategy to actively change their business mix in response to
new information

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6.2. Experience Rating

Experience rating refers to the practice of setting the price of a policy based on its
previous claims experience and is applied to large policies or for portfolios where the
claims frequency is very high. As such, this method is heavily utilised in the
Corporate space particularly for Fleet and larger Workers’ Compensation policies,
although it may also be used in some high frequency Liability and Commercial
Property policies. Except for very large policies, the final premium will be based on a
blend between the

 Pure Experience – based on the historical claims experience of the specific policy
 Exposure – based on applying portfolio level assumptions to the exposure mix of
the policy

Typically, the weighting towards the Pure Experience will be higher for policies which
have higher exposure and more years of experience.

Recommendation 31: That the Actuary considers the following when implementing
an experience rating methodology

 The impact that the following factors have on the choice of the weighting
between the Pure Experience rated premium and the Exposure rated premium
for a particular policy:
 Stability of the claims experience over time
 Number of years of available data - a minimum of 3 years of claims data is
required with 5 years being preferable
 Size of the account
 Changes in the type of risks being covered under the policy
 Account composition – if there segments of the portfolio that generally
experience large infrequent losses then these segments should have a
higher weighting towards being exposure rated rather than based on the
actual experience
 Consistency of the policy wording over time particularly with regards to
the level of excess on the policy
 Current market practice – currently the market practice adopts a higher
weighting towards the claims experience of the portfolio than can be
justified using statistical theory
 Due to the low frequency and high severity of large losses, Exposure rating should
be used to allow for the losses above the large loss limit. As such, the choice of
the large loss limit can have a significant impact on final quoted price
 How to include claims from natural perils in the model
 The weighting in the model for the different years of experience. In particular,
should there be a higher weighting towards the more recent years
 Allowance needs to be made for incurred but not reported claims, noting that
the renewal pricing is likely to be provided around 6 weeks prior to the expiry of
the policy

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6.3. Industry Rating

Industry or occupation is a key rating factor across a large number of Commercial

portfolios including Commercial Property, Liability and Workers’ Compensation and
has a large impact on the cost and frequency of claims. Examples of the impacts of
industry include

 Property - a glass manufacturer utilises fire in the manufacturing process, hence

there is a proximate cause for fire
 Liability - a shopping centre or a supermarket has a significant amount of people
traffic hence there is a high frequency of Liability claims
 Workers’ Compensation - the employees at a construction site or a mine are
much more likely to be seriously injured compared to those working in an office

As a large proportion of industries in the Australian market are small in size, the
historical claims experience that is available even at an industry level does not
necessarily reflect their underlying risk. This can make it very difficult for a
Commercial insurer to appropriately rate by industry.

The current book rating structure typically used in the market is:

 Each insured company is classified under the Australian and New Zealand
Standard Industrial Classification (ANZSIC). Some insurers split individual ANZSICs
into sub-industries that they believe have different risk characteristics.
 Each industry is assigned to a hazard level based on an assessment of the
relative risk of different industries. There are generally 10 – 20 hazard levels in a
typical rating structure.
 A different premium rate or relativity is assigned to each hazard level. Workers’
Compensation portfolios tend to apply a separate premium rate for each
ANZSIC rather than grouping up to a hazard level.

There are a number of approaches used by actuaries to allow for the industry of the
insured in the technical rates. An overview of some of the main approaches,
including the pros and cons of each method are described below.

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Underwriting Judgement
 The Portfolio Manager sets the hazard level for each industry based on their
assessment of risk.
 Advantages
 Requires no data or analytics and thus can be used by small insurers
with limited historical experience, Corporate insurers or insurers who
have made a limited investment in analytics
 The Portfolio Manager is able to reflect their understanding of risk in the
pricing structure
 Can be used to pro-actively price emerging risks.
 Limitations
 Is highly subjective
 it is difficult to develop granular pricing structures with a large range of
hazard levels and it is difficult to justify the pricing structure to
intermediaries
 Has a strong key person risk with the decision and knowledge around
the decision sitting with the Portfolio Manager.

Modelling 2-digit ANZSIC Code

 A technical hazard level is developed for each 2-digit ANZSIC by
incorporating it in the modelling process
 Advantages
 Makes use of the data and analytics to form a view about the risk
 Enables the pooling of claims experience of similar types of businesses
 Limitations
 Assumes that ANZSICs which share the first two digits have similar claims
experience which is not necessarily the case
 No assessment of risk is formed at a 4-digit ANZSIC level thus not using
all of the available information on the portfolio

Hierarchical Credibility Modelling

 A rate is developed for each ANZSIC by blending the performance of the
ANZSIC with that of the higher levels of the ANZSIC hierarchy with a credibility
factor based on the volume of data that is available at each level of the
hierarchy.
 Advantages
 Some weighting is given to the performance of each individual ANZSIC
based on the volume of experience available
 Enables the pooling of claims experience of similar types of businesses
 Limitations
 Assumes that 4-digit ANZSICs in the same hierarchy exhibit similar
insurance risk which is not necessarily the case

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Credibility Modelling combined with Underwriting Judgement

 A technical hazard level is developed for each ANZSIC by blending the
experience of the ANZSIC with the experience of similar ANZSICs identified
through underwriting judgment
 Advantages
 Businesses are grouped based on perceived risk rather than a
hierarchy which was not developed for insurance risk
 Limitations
 Relies heavily on underwriting judgment as very few ANZSICs are large
enough for the claims experience to be credible
 A strong key person risk with the knowledge around the allocation of
industries into distinct groups being with the Portfolio Manager.

Attribute driven occupation rating

 A method based on grouping industries based on their risk characteristics.
This method has the following steps
 A number of industry attributes that may drive risk are identified. For
example, industries which hire sub-contractors or labour hire and
industries which are exposed to high volumes of non-employee traffic
are more exposure to Liability claims
 Classify each industry in an insurer’s rating structure as having a high,
medium or low exposure to the attribute. For example, shopping
centres and supermarkets have high exposure to crowds while
electricians would not as they would generally not own a property
 Modelling all the non-industry specific rating factors in a GLM
framework and then testing each of the industry attributes by
incorporating them in the model to identify which ones drive risk
 Blending the actual experience of each ANZSIC with the underlying risk
implied by the industry attributes
 Advantages
 The experience of each ANZSIC is blended with the experience of
other ANZSICs which share common insurance risk characteristics
 Easier to explain the drivers of the hazard assessment for each ANZSIC
 The results of the technical analysis can be an input into both pricing
and underwriting
 Limitations
 Developing the attributes and then classifying an industry into
high/medium/low exposure to each risk takes time and resources
 Relies on underwriting judgement to make an assessment of each
industry against each risk characteristic.
 This approach would be more suitable for a large SME portfolio which
has significant amounts of data

Recommendation 32: That the Actuary adopts the approach for industry rating that
is most suitable for each portfolio based on the characteristics of the portfolio.

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6.4. Alternatives to Competitor Analysis

As Personal lines portfolios are typically sold direct to customers, it is possible for an
insurer to get information on the rating structures of their key competitors by
performing a number of quotes. The insurer can then use a combination of the
competitor premium and the technical premium to identify segments of the portfolio
which require immediate action.

However it is more difficult for the insurer to understand the premium charged by
their key competitors as it is primarily distributed through intermediaries. In spite of
this, the insurer can get an indication of how their premium compares to the market
by using two internal metrics

 Renewal Rate – the number of policies renewed divided by the number of

policies offered for renewal
 Strike Rate – the number of new policies written divided by the number of policies
quoted

For example, a segment of the portfolio with

 A low Renewal Rate / Strike Rate – suggests that the insurer premiums are
significantly higher relative to their competitors premium
 A high Renewal Rate / Strike Rate – suggests that the insurers premiums are
significantly lower relative to their competitors premium

This assumes that pricing is a key driver of volumes and does not allow for
 The strength of the relationship that the insurer has with their intermediaries
 The attractiveness of the policy wording, where differences in wordings exist
 The strength of the brand of the insurer including its size and expertise in the
market, credit rating and reputation for paying claims

However, analysis performed on these metrics will give the insurer a better idea of
how they are placed in the market and will aid in understanding the likely impact of
pricing changes.

In comparing the Strike Rate and the Renewal Rate metrics, we note that

 The strike rate will tend to react faster to differences between the pricing of the
insurer and the wider market than the renewal rate as it is easier for
intermediaries to not place new business with an insurer than to move significant
volumes of existing business from that insurer
 The strike rate can be overstated if the insurer is known to be significantly
overpriced in a particular segment as intermediaries may not spend the time to
even get a quote

Recommendation 33: That the Actuary develops renewal rate and strike rate
analysis for each portfolio to better understand the market positioning of the insurer
by segment.

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6.5. Adding Value to a Corporate Insurance Portfolio

The nature of the Corporate portfolio can make it very difficult for an Actuary to
utilise standard analytical techniques to provide input into business decisions. As
such, actuaries have struggled to gain a strong foothold in the pricing of the
Corporate segment and many companies purely rely on Case Underwriters and Risk
Engineers delivering good risk selection and individual risk pricing to achieve
profitability targets. The lack of analytics has contributed to the following market
dynamics:

 The pricing and profitability of the overall segment has historically been very
cyclical, with super-profits followed by the entry of significant capital into the
market driving the price down to highly unprofitable levels
 Insurers may focus on risk selection and selecting policies with lower risk
exposure in a segment regardless of the market price which may be very
unprofitable particularly during the soft market
 Insurers may focus on writing high hazard risks for the high premium charged.
Due to the typical low frequency and high severity claims for a typical
Corporate portfolio, the high hazard risks can make super profits for a number
of years but are susceptible to large losses which can result in a significant loss
occurring 1 in 10 years being larger than all of the achieved profits over the
period.

Although, standard actuarial techniques such as GLM modelling cannot be directly

applied to a Corporate portfolio and the results of any technical analysis are less
conclusive, we suggest that technical analysis can still add value to the pricing and
portfolio management process of this segment. Some examples are outlined below:

 Natural peril pricing - in pricing a large ISR account, it can be difficult for a Case
Underwriter to assess the weather related risk as some weather related events will
have a return period of more than 1 in 50 years. Utilising natural peril models to
assess both the exposure and the expected cost of these type of losses can help
the Case Underwriter both charge an appropriate price for this exposure as well
as manage their aggregate exposure in high risk areas
 Pricing adequacy framework - an Actuary can develop a framework which
provides a view of the appropriate price that should be charged for an
individual policy. At the most basic level, the framework can provide the Case
Underwriter with an understanding of the total non-claims related costs such as
administration expenses, reinsurance expenses, commission and profit margin.
The Actuary can further enhance the framework by including claims costs based
either on portfolio level data or the historical claims experience of the actual
policy, with appropriate allowances for IBNR and IBNER claims, inflation and large
losses.
 Optimising reinsurance arrangements - reinsurance arrangements are used more
actively in the Corporate space. Actuaries can develop a model to compare
the impact of the different reinsurance arrangements on the expected
profitability and the volatility of the profitability of the portfolio.

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 Analysis of portfolio level historical claims experience – even though the

available historical claims experience may be limited, analysis of this data can
still provide outputs which can enhance the underwriter’s understanding of
claims drivers. These insights may include:
 The different types of claims that impact different industries
 Which industries have been most impacted by large losses?
 Have historical reinsurance arrangements been effective in reducing the
volatility in the profitability of the portfolio?
 Are there policies that have performed poorly over a number of years?

The insights may lead to recommendations around policy wording changes,

case underwriting standards or changes in the strategic direction of the portfolio.

Recommendation 34: That the Actuary working on a Corporate portfolio segment

be innovative in identifying areas where they can add value to this segment.

6.6. Large Loss modelling

Large losses can have a very significant impact on the performance of a
Commercial portfolio and typically are much larger than those observed by
Personal Lines portfolio. The Corporate segment will typically have a very high
proportion of the total claims cost being made up of large losses. A typical ISR
portfolio will have the largest 2% of claims can make up more than 70% of total
costs. Some examples of commercial large losses that have occurred in Australia
are:

 Professional Indemnity – Directors and Officers – The class action on Aristocrat

estimated at a cost to the insurer of $100 million dollarsv
 Commercial Fire – The fire at the warehouse for Lombard, The Paper People at
an estimated cost of $25 millionvi
 Commercial Fire – The Canberra bushfires in 2003 which destroyed Mt Stromlo at
a total cost to the three insurers of $34.39 million with an additional $27 million
awarded to ANU cost against AON for not ensuring that the cover provided was
appropriatevii
 Liability / Workers’ Compensation – Kendrick v Bluescope Steel (Workers’
Compensation) and Australian Steel Mill Services (Liability) with a total cost of
over $16 millionviii

The key challenge that the Actuary will face is the lack of credible data to make an
accurate estimate of large losses for pricing purposes. The key reasons for the lack of
data include

 The frequency of large losses is very low

 The large loss experience can be heavily impacted by the skill of the underwriter
or changes in underwriting standard
 Business mix changes may mean that some types of historical large losses may
not re-occur in the future as the insurer may no longer insure the particular type

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of policy that has caused the claim. Conversely, the insurer may be exposed to
new risks which it was not exposed to historically
 Improvement in risk management processes can lead to reductions in the
underlying large loss risk of certain segments

Recommendation 35: That the Actuary in estimating the cost of large losses for
pricing purposes, supplements the actual experience of the insurer with the
following:

 Discussions with the portfolio manager to gain an understanding of what caused

the historical large losses and whether they are reflective of future underlying
experience
 Review of the business mix by industry and gain an understanding whether the
portfolio has shifted towards high hazard risks
 Review of industry level large loss data, this may be available from reinsurers
 External industry data (ISA, APRA NCPD) or court judgements

In developing a technical price for large losses the Actuary needs to be able to

 Estimate the frequency and the severity of large losses leading to an overall
portfolio level large loss loading
 Allocate large losses by segment with allowance for the fact that some segments
of the portfolio are more prone to large losses than others.

To estimate the frequency, the typical approach is to

 Consider the actual experience over a long term period. This period should be
at least 5-10 years but longer periods may be necessary for either small or long-
tail portfolios
 Make adjustments to the frequency based on any known changes in
underwriting standard or business mix. For example, adjustments will need to be
made to the frequency if a significant proportion of the claims historically
occurred in an industry that the insurer is no longer writing.
 For portfolios where there are only a limited number of large claims, the Actuary
can estimate a claims frequency and then use a Poisson distribution in order to
estimate the likelihood of the actual experience being in line with the
assumption.

To estimate the average claim size of Large Losses, a typical approach is to

 Fit a distribution to the historical experience of large claims. Distributions such as

the LogNomal, Pareto or Extreme Value are commonly used to estimate the
underlying claim size of large losses in Commercial Property and Liability
insurance. The selection of the distribution should be based on the
characteristics of the portfolio and the how the distribution fits against the existing
experience.

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 An allowance has to be made to allow for extreme large losses that have not
been observed in the available data
 Where possible, the Actuary should check the selected assumptions against
available industry data. The Actuary, in collaboration with the Portfolio Manager,
will need to form a view on whether the differences between the industry data
and the data of the insurer are fortuitous or due to differences in the portfolio mix
or underwriting standards

When allocating the large losses by segment, the Actuary should consider

 That the standard methods for working losses such as GLMs and multi-way
segmentation do not work well because the number of claims is small
 Allocating large losses in line with working losses may not be appropriate
particularly for portfolios or segments within a portfolio whose primary exposure is
low frequency, high severity events.
 Sum Insured – policies with sums insured below the large loss limit cannot incur a
large loss. In addition, the larger the sum insured, the larger the average claim
size will be
 Industry – some industries are known to have a higher risk and the insurer may
already have a classification which identifies high hazard industries. A larger
proportion of the large loss costs could be allocated to this segment

Recommendation 36: That the Actuary understands the impact that a small change
in the assumptions around large losses can have on the assessment of profitability.

6.7. Rate Index

The rate index is the ratio between the actual premium charged and the technical
premium. This measure is a lead indicator of profitability as an assessment can be
made when the business is written rather than when the claims experience emerges.
Rate index has the potential to be used as a key metric by the insurer but to do so
requires

 A significant level of investment from the Actuary to develop the metric at a

detailed level
 Updating of the metric on a regular basis
 The Actuary to promote the value of the metric across the organisation

Basing the rate index on the technical premium will provide the insurer with a clear
understanding of any movements in profitability due to changes in premium and
changes in mix of business. We note that as the metric is based on actuarial
judgement and assumptions, changes in the assumptions can result in restatements
in the historical rate index. These changes will require careful communication to
ensure portfolio managers have a clear understanding of the reason for these
changes and that they do not impact the credibility of the metric.

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Recommendation 37: That the Actuary invest time to develop a regular metric
which compares the actual premium and statistical premium which is then used as a
lead indicator to

 Identify unprofitable segments of the portfolio

 Identify emerging trends in profitability
 As an organisational KPI
 Identify unfavourable movements in business mix

6.8. Machine learning

Machine learning has been used extensively in the recent years in Personal Lines
portfolios to enhance and supplement standard GLM analysis. Unlike GLMs, machine
learning does not require the specification of the claim drivers or the interactions
between them but instead it allows the data to speak for itself by finding patterns
between characteristics within the data. The method is much faster in producing
actionable results in comparison to GLMs.

Machine learning is likely to be best used on SME portfolios for insurers with a larger
volume of business as the method requires significant amounts of data, a reasonably
stable performance and a large range of rating factors.

Recommendation 38: That the Actuary puts together a pilot to test the value of
machine learning on a large homogenous SME portfolio such as Business Packages
or Commercial Motor. Possible areas for a pilot may include:

 Predictive Modelling – to detect significant risk drivers and interactions which

have not been factored into the GLM by analysing model residuals.
 Analysis of Volumes – Machine learning can be used as an efficient method to
track movements in portfolio mix particularly after the implementation of a rating
change.
 Achieved to Book Monitoring – to identify segments of the portfolio which are
showing a high level of deviation between the actual and the book premium.
 Book premium optimisation – to identify segments of the portfolio where the book
premium deviates significantly from the technical premium
 Profitability and Volumes analysis – machine learning has the capability to
segment the portfolio taking into consideration multiple metrics and thus can
identify segments of the portfolio which are growing and unprofitable as well as
segments which are profitable and shrinking. The approach is able to
differentiate persistent trends as compared to general volatility and hence once
segments of the portfolio are identified, the case for pricing corrective action is
compelling as the approach considers both the profitability and volumes at the
same time.

6.9. Other Modelling

This section provides an overview of some of the other modelling techniques that
can be used by the Actuary in order to address the additional business problems
that can arise in a Commercial lines portfolio.

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Recommendation 39: That the Actuary considers whether stochastic modelling,

simple portfolio segmentation or credibility analysis are relevant methods to solve a
specific business problem

 Stochastic modelling for aggregate deductibles – Some larger Corporate policies

may have an aggregate deductible where the insurer will only cover the claims
costs for the policy which exceed the aggregate deductible limit. Calculating a
price without using stochastic modelling can be extremely difficult particularly if
the policy covers a number of heterogeneous risks. Instead, the Actuary can
simulate a large number of scenarios and provide the Portfolio Manager with an
understanding of the expected reduction in claims cost that would eventuate
from different levels of aggregate deductable.
 Simple Portfolio Segmentation – Due to the limited homogenous data, it may be
not possible to apply sophisticated pricing techniques to small commercial SME
or Corporate portfolios. However, significant value can often be gained from
relatively simple analysis such as frequency, average claim size and loss ratio
portfolio segmentation which can provide insights into the underlying drivers of
the claims performance. Given the simple book rating structure used in each
section of a portfolio in Commercial insurance the results of this analysis can
often significantly increase the sophistication of the pricing approach utilised.
 Credibility analysis – This can be used to refine technical premium at either a
vehicle, postcode or industry level. In addition, credibility analysis can be used
when analysing a portfolio with limited data to test the likelihood of emerging
trends being persistent or purely fortuitous. When using credibility analysis, the
actuary needs to ensure that hierarchy that is used is appropriate for the metric
being modelled.

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7. Pricing of Long Tail Classes

The long tail classes of Liability, Workers’ Compensation and Professional Risks make
up over 35% of the total Commercial insurance portfolio. The long development
patterns in long tail portfolios results in additional uncertainty for the pricing Actuary
in constructing the technical premium and understanding whether there is
consistency between the emerging performance and the technical premium.

7.1. Estimation of Ultimate Claims Incurred

As a large proportion of claims in the long tailed portfolios take many years to be
reported and finalised, the claim count and incurred cost to date for the most
recent years is only a very small proportion of the ultimate incurred cost. An error in
the IBNR/IBNER can result in the insurer losing volumes due to being too expensive or
making a significant loss due to under-pricing of the risk. Furthermore, the long tailed
nature of the portfolio will mean that it is likely to take a number of years before it is
clear that the emerging experience of the claims differs significantly from the
technical model.

Recommendation 40: That the Actuary develop a framework which enables the
monitoring of the emerging experience of claims reported and incurred against the
undeveloped projection, calculated by combining the technical model with the
development factors

The typical steps in projecting the claim cost over the underwriting year for pricing
purposes are

 Estimate the IBNR/IBNER over the modelled period. Some methods that can be
used include
 Allocation of reserving IBNR/IBNER to the portfolio – although the Actuary
needs to understand whether the assumptions behind the modelling are
suitable for pricing
 Develop separate IBNR/IBNER Models for pricing – using standard IBNR
modelling techniques such as the chain ladder, PPCI, PPCF or PCE
methods. The Actuary should understand the drivers of any significant
differences between the pricing IBNR/IBNER and that calculated in the
reserving models.
 Calibrate the modelled cost to the actual experience
 Project the model forward to the underwriting year allowing for future inflation
and any expected underwriting or environmental changes including tort
temperature that will impact the claims cost.

Recommendation 41: That the Actuary understands and communicates the level of
uncertainty that exists in the technical premium due to the estimation of IBNR and
the projection to future underwriting years

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7.2. Superimposed Inflation

There is a tendency for both medical costs and court awards for personal injury
claims to increase significantly faster than inflation. This results in the need for a
superimposed inflation assumption for the pricing of Liability, Workers’ Compensation
and some segments of Professional Risks. This assumption should be based on a long
term horizon and needs to take into account the mix of claims between property
damage, bodily injury and economic loss as well as the state and federal legislative
environment. Historical experience has suggested that the increases in claims costs
which exceed inflation do not occur consistently over time but tend to be very
erratic and occur in bursts.

Recommendation 42: That the Actuary is transparent about the superimposed

inflation assumptions adopted in the analysis and takes into account the legislative
environment, the characteristics of the portfolio, the long term trends in
superimposed inflation in both insurer and industry data and any information
available on the assumptions adopted across the industry.

7.3. Latent Claims

A latent claims event results in a large number of claims which are reported many
years after the event and are able to be attributed to a single exposure which was
not known to be a significant risk when the policy was initially written. Latent claims
are typically related to bodily injury and thus mainly impact the Liability, Workers
Compensation and Professional Risks portfolios. As there is a significant lag period
between the claimant being exposed to the cause and the onset of the symptoms,
the insurer may not identify this additional cause of loss for many years and thus will
not make underwriting or pricing changes to reduce their exposure to this risk.

The most prominent example of a latent claim event is asbestos where the total cost
is expected to be in the order of $10 billionix in Australia in current dollars. In addition
to asbestos, there have been a number of other smaller latent claim events
including sexual molestation, silicosis and prolonged exposure to loud noise.
Potential future latent claims events that have been discussed in the industry include
nano-technology, genetically modified foods and mobile phones. However, it is
likely that the next latent claim will arise from a cause that is yet to be identified.

Recommendation 43: The Actuary needs to be able to set a price for latent claims
and develop monitoring tools which assist to identify emerging latent claims so that
appropriate pricing and underwriting action are taken as early as possible. This
monitoring should include

 Investigation of all claims which are reported more than 10 years after the
exposure occurs
 Ensuring that there is regular communication between claims, underwriting
and actuarial across the key long tail classes
 Keeping up to date around the emergence of latent claims in other countries
 Reviewing advances in the legal and medical community

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7.4. Legislative Changes and Precedence

Liability, Workers’ Compensation and Professional Risks all cover the insured for a
legal liability which results in the incurred amount being based on legislation and
either a direct result of a court judgement or through precedence.

As such, significant changes to the legislation or trends in judicial decision making

can have a significant impact on the incurred amount and the frequency of claims.
Examples of recent changes in legislation or precedence include

 Liability tort law reforms in each state following the Ipp Reportx, implemented
mainly in 2003
 Changes in Worker’s Compensation law in Western Australia in 2011
 The Bridgecorp decision which even though it was made in NZ is also relevant in
NSW, ACT and NTxi

Recommendation 44: That the Actuary working in the long tailed classes needs to
be aware of all legislative changes or significant court decisions that will impact the
portfolio. This will require

 Attending industry events and reading actuarial and industry publications

 Having regular and open discussions with underwriting and claims
 Reading and reviewing legislation when it is changed
 Reading advice provided by legal firms around legislative changes and
recent court judgments

When there is a significant change in the legislative environment identified, the

insurer will need to establish a cross-functional project team combining claims,
underwriting and actuarial functions to determine the best assessment of the likely
changes in the claims cost for the portfolio. As part of this review, the project team
will need to

 Provide a detailed review of the legislation both pre and post change
 Review of available industry publications from insurance bodies, law firms and
actuarial consultancies
 Identify whether the changes will impact each segment of the portfolio
consistently
 Review a sample of existing claims and have experienced claims staff assess
the expected cost under the new legislation
 Define the ongoing monitoring which will follow the implementation of the
reforms to refine the assessment of the impact if the experience emerges
differently than expected

Recommendation 45: That the Actuary drives the formation of a cross functional
team to review the potential impact of legislative changes. The team should
continue to work together following the implementation of the legislative changes
to monitor the actual impact of the changes.

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8. Complexities around Premium in Commercial Insurance

There are a number of complexities that exist in how premium is treated and
transacted within Commercial insurance. These complexities are discussed in this
section and are typically a combination of how the policies are sold, the seasonality
of claims and the needs of the insured.

8.1. Seasonal Trends around the Sale of Policies

A large proportion of businesses will purchase their Commercial insurance policies
towards the end of their financial year which will typically be the end of June. This
results in the June quarter being extremely busy for all staff involved in the selling of
policies including Portfolio Managers, Case Underwriters and Business Development
Managers. An additional complexity is that a very high proportion of large
Corporate policies are written during the June quarter. This results in both the total
gross written premium as well as the average gross written premium per policy being
higher for policies attaching in the June quarter than in the rest of the year.

Recommendation 46: That the Actuary recognises that the business written in any
particular quarter is not reflective of the overall portfolio mix. For example, to
determine portfolio level premium growth the Actuary should compare the premium
to the same period in the previous year or to explicitly adjust for the different risks
written by quarter.

Recommendation 47: That the Actuary has a strong understanding of the annual
business cycle of the insurer and when pricing analysis needs to be provided to be
implemented prior to the June volumes

There is a high level of seasonality for the Crop portfolio where all business is initially
attached around August with the insured having the ability to make changes to the
expected yield and price of the crop until mid-October. The overall yield and price
will depend on the weather and can vary significantly from year to year resulting in
premium volumes varying by up to 100% from year to year. In addition, some insurers
will defer payment of the premium until after the harvest.

Recommendation 48: That the Actuary considers whether the volume and the
seasonality of Crop business will have an impact on any analysis of the insurer.

8.2. Premium Adjustments at Policy Expiry

The premium charged for Workers’ Compensation is typically based on a rate
applied to the wages bill for the insured. At the start of a year, the insured is required
to estimate the expected wage bill of the company and is charged an upfront
premium. At the expiry of the policy, the company is required to provide the actual
wage bill for the year and then an adjustment is made to the premium. This can
result in a significant change to the premium for the overall portfolio particularly if
there was a significant change in the economic environment. Similar premium
adjustments do occur for some other portfolios such as Construction.

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Recommendation 49: That the Actuary understands the typical adjustments that are
made to the policy premiums at the end of the year and, if the premium adjustment
is significant, develops the written premium to an expected ultimate premium. This
development will need to take into account any changes in economic conditions.

8.3. Earnings Patterns

For most general insurers within Australia, there is some seasonality around the
occurrence of claims with a larger proportion of claims occurring between
December and April, particularly if the insurer has significant exposure in areas
exposed to cyclones. Typically, even with this seasonality, Insurers will adopt a pro
rata earnings pattern which will result in the loss ratio performance between May
and October expected to be slightly better than that between November and April.
This will typically be allowed for in the phasing of the budget but only limited explicit
allowance will be made in reporting or analysis for this seasonality.

There are some sections of some Commercial portfolios where the seasonality is
significantly more pronounced than in the overall book. One such example is the
Machinery Breakdown section of Country Pack - where the machinery insured has
limited use during the winter months but is heavily used during the summer months
resulting in the loss ratio during the summer months being around twice that of the
winter months.

Another example of an unusual earnings pattern is that of extended motor warranty

insurance for commercial vehicles. The extended warranty policy is not on risk until
the expiry of the manufacturer’s warranty period. For most new motor vehicles the
manufacturer’s warranty is time based with a kilometre limit. When setting the
earning pattern, the insurer is likely to assume that the time limit will expire before the
kilometre limit – to exceed the kilometre limit first the vehicle will need to be driven
on average 100 kilometres a day. Commercial motor vehicles such as trucks will
easily be driven more than 100 kilometres a day and thus be on risk much earlier
than would be suggested by the time based manufacturer’s warranty period. The
emergence of claims well before the policy was thought to be on risk will result in an
overstated loss ratio potentially leading to an incorrect business decision. The
Actuary needs to develop an earning pattern to allow for some vehicles being on
risk earlier than the time limit for the manufacturer’s warranty.

Recommendation 50: That the Actuary appreciates the differences between the
true earning pattern and what is used in both financial and management
information reporting to ensure that the business has clarity over the underlying
performance of the portfolio so that they are able to make effective business
decisions.

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8.4. Insurance Taxes

There are a number of taxes or levies that are currently applied to Commercial
insurance these include the Fire Services Levy, GST and Stamp Duty. Currently for a
Victorian Rural business, if the insurer is charging $100 for the basic premium, there is
an additional $80 for Fire Services Levy, $18 for GST and $19.80 in Stamp Duty leading
to a total cost of $217.80 to the end customer - the total amount of taxes exceeds
the original policy premium.

We note that the Fire Service Levy percentage varies from year to year and that if
the Fire Service Levy is not excluded from the premium, that an increase in the Fire
Service Levy charged will cause a reduction in the loss ratio as well as an increase in
the written premium potentially leading to an incorrect understanding of the trends
in the underlying business.

Recommendation 51: That the Actuary excludes all taxes including Fire Service Levy
from all analysis and performance measures.

We note that the impact of having higher taxes on the property sections, results in
insurers being more comfortable in the liability portfolio cross-subsidising a property
portfolio. This is particularly the case for the package products where a reduction of
$100 in premium in the liability section offset by an increase in premium of $100 for
the fire section in the rural area of Victoria would result in an additional cost to the
insured of $96.8.

We note that for Victoria from 1 July 2013, the Fire Service Levy will be replaced by a
fairer and more equitable property based levy and that the NSW government is
currently undertaking a review which is currently expected to result in a
recommendation to a move to a property based charge. Tasmania is the only other
state who currently uses a Fire Service Levy.

Recommendation 52: That the Actuary is aware of the level of cross subsidy and
that the existing tax regime is likely to mean that companies are more comfortable
with a higher level of cross subsidisation.

8.5. Terrorism Reinsurance Cover

Following the terrorist events in the United States of America on September 11, 2001,
both insurers and reinsurers started to exclude terrorism from their policy wordings.
This resulted in it being difficult for end customers to find insurance cover for terrorism
risk at an affordable cost. In reaction to this, the Australian government introduced
the Terrorism Insurance Bill 2002 which rendered the terrorism exclusions in insurance
contracts ineffective but had no impact on reinsurance contracts. To support the
insurers, the government introduced the Australian Reinsurance Pool Corporation
(ARPC) which provides reinsurance cover for terrorism risk. As the ARPC is a
government run organisation, some insurers have treated the premium charged by
the ARPC, as an additional levy on premium. The ARPC, however, states that their
“reinsurance premium is the same as any other reinsurance cost. Consequently, we
would prefer that it is treated in the same manner and not shown separately on the

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original insurance policy.” xii We note that the insurer is not required to take up the
ARPC cover and has the option of either reinsuring terrorism risk elsewhere or
retaining the risk. The ARPC covers Commercial Property, Business Interruption and
Public Liability but currently does not charge any reinsurance premium for the Public
Liability cover.

Recommendation 53: That the Actuary treats the premium collected by the ARPC in
the same manner as a typical reinsurance premium.

8.6. Burning Cost Premium Model

Insured companies with a large workforce may have the option of taking out a
Burning Cost or Retro Paid Loss policy. This enables the insured to be charged a
premium that is based on their own claims performance, subject to a set minimum
and maximum. This model can be popular with both the insurer and the insured as it
provides the insured with a direct link between the success of their Operational
Health and Safety program and their insurance premium. Typically, the burning cost
model requires an upfront payment of premium with a number of adjustments
based on the emerging claims experience in the years following the expiry of the
policy. Burning Cost policies can provide significant difficulties for the analysis of a
Workers’ Compensation portfolio as premium adjustments may occur up to 5 years
following the expiry of the policy.

Recommendation 54: That the Actuary separate Burning Cost Policies in all analysis
and reporting.

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9. Conclusion
In conclusion, the pricing of Commercial insurance is a challenging but rewarding
area for an Actuary to develop a career. The key recommendations of this paper
as to how the Actuary can be most effective in being able to influence business
outcomes in Commercial insurance are:

 That the Actuary builds an in depth understanding of the Commercial portfolios,

the market and the external environment
 That the Actuary works in partnership with the Portfolio Manager
 That the Actuary develops a detailed understanding of the data and its
limitations
 That the Actuary adopts appropriate technical pricing methods which allow for
the characteristics of the portfolio.

ihttp://www.apra.gov.au/GI/Publications/Documents/GI%20Quarterly%20Performance%2020

120630.pdf
iihttp://www.apra.gov.au/GI/Publications/Documents/IGIS%2020120630.pdf
iiihttp://www.anz.com.au/documents/business/commercialcard/ANZ-Business-Package-

Policy.pdf
ivhttp://www.bricher.com.au/wp-content/uploads/2012/05/QBE-Steadfast-Business-Wording-

QM485-0610.pdf
vhttp://www.finity.com.au/wp-content/uploads/2011/08/GIS08_1a_Paper_PIDO.pdf
vihttp://www.theage.com.au/articles/2004/11/12/1100227582113.html
viihttp://www.insurancenews.com.au/local/aon-settles-with-anu-over-mt-stromlo-loss
viiihttp://www.lawlink.nsw.gov.au/scjudgments/2007nswsc.nsf/6ccf7431c546464bca2570e600

1a45d2/5aa797eb52378aecca2573a200770cd5?OpenDocument
ixhttp://www.apra.gov.au/GI/Publications/Documents/IGIS%2020120630.pdf
x http://revofneg.treasury.gov.au/content/Report2/PDF/Law_Neg_Final.pdf
xihttp://www.zurich.com.au/zportal/cs/ContentServer?pagename=GroupSite/Page/ThreeCo

lumnLeadImage&cid=1305872697337&p=991803150863
xiihttp://www.arpc.gov.au/?/qanda#premiums

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