Swiss Re's New Sigma Study Explores Scenario Planning for Insurers

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Insurance Broadcasting
Wednesday, 02/25/09

Swiss Re's New Sigma Study Explores Scenario Planning for Insurers
ZURICH, Feb. 24 /PRNewswire-Asia/ --

Excerpts:

Scenario analysis helps insurers make business decisions by considering a number of potential future developments, allowing them to manage a broad range of often interrelated risks. Scenario analysis is used in areas such as strategic planning, risk management and underwriting.

"Events like the financial crisis will accelerate the adoption of these approaches and encourage insurers to use state-of-the-art scenario analysis to evaluate risks," said Swiss Re economist Kurt Karl.
Common uses of scenarios in insurance

Insurers face a number of risks, such as natural catastrophes, mortality risks and investment volatility. These risks often interact in complex ways.

State-of-the-art scenario analysis

A state-of-the-art approach would see insurers excelling in the following types of scenario analysis:
-- A global model of assets and liabilities that can be stress tested with insurance, economic and financial market shocks.
-- A regular programme of internal scenario tests related to shocks such as natural catastrophes and pandemics, as well as economic and financial market shocks.
-- Models that capture how these shocks affect each major asset class and business line.

Read Full Article: http://www.insurancebroadcasting.com/insurance-news-022509-7.htm


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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.