Initial Healthcheck: Typical Report Findings and Implications
The following shows an extract from the typical results of an Initial Healthcheck applied to a client with a very inefficient insurance programme:
| I. Your Past | Detailed Findings |
| 01. Reserves | Last actuarial review 5 years ago, never finalised No up to date assessment of adequacy of reserves for historic risks |
| 02. Data Inventory | No documentation of reliability of data used to determine balance sheet reserves eg asbestos publicity/HSE forecasts |
| 03. Core Risk Metrics | No understanding of large claim frequency by class No understanding of substantial insurer profit margin (insurer’s loss ratio was 20%) |
| 04. Legacy Policies | Piecemeal inventory of historic policies/insurers (assets) No understanding of their current name, solvency condition/likelihood of future claims (asset value) |
| Implications | (1) Impossible to assess whether historic risks are over-reserved (unnecessarily ties up funds for past risks which could be used for future risks) (2) Usually means low XS/AGGS (potential characteristics of future claims assumed to be worse than they really are) (3) Low XS/AGGS are usually unattractive to insurers (you are retaining a minimal share of a potential future large catastrophe claim) |
| Financial Impacts | (1) XS/AGGS too low/premiums too high for the real extent of future risk (2) Excessive insurer profit |
