Increasingly complex regulatory and product requirements have sparked a technological arms race among insurers. But rather than investing in countless racks of computers to process all the data, insurers are turning to virtual – or cloud – systems to cope with periodic peaks in demand for processing capability.
Group life providers scaled back their coverage in the wake of the terror attacks on the World Trade Centre in 2001, but by taking a more sophisticated approach to modelling its risk exposure, Unum is now able to offer cover across the entire country.
As Solvency II comes closer to reality, insurers now have to focus not just on accurately collecting and modelling data, but also on how that data is integrated into the entire risk management process. But what is enterprise risk management?
Austria’s Financial Market Authority (FMA) maintains a fairly conservative approach to the supervision of insurance firms, which has shielded many of them from the worst effects of the financial crisis. But with Solvency II around the corner, how far is Austrian insurance regulation from a truly risk-based model?
It may seem counterintuitive, given these deflationary times, but inflation-linked fixed income strategies are proving a hit with investors as fiscal stimulus raises the threat that inflation will take over in the medium term.
Internal models are incentivised under Solvency II by the potential to lower capital requirements, but are subject to a number of risks. Parameter risk is one that has got scant attention. This article demonstrates that the primary source of parameter risk for annuity providers is the direction of future trends, and argues that insurers should hold additional capital accordingly.
