No abstract

A cash flow model is proposed as a way of analysing uncertainty in the future development of a general insurance company. The company is modelled alongside the market in aggregate so that the impact of changes in premium rates relative to the market can be assessed. An extensive computer model is developed along these lines, intended for use in practical applications by actuaries advising the management of genera1 insurance companies. Simulation methods are used to explore the consequences of uncertainty, particularly in regard to inflation and investments. Some comments are made on the role of actuaries in general insurance. Alternative approaches to describing the behaviour of an insurance firm in the market are considered.

After reviewing some general issues concerning solvency and the problems associated with establishing the financial strength of a general insurance company using the traditional balance sheet concept, the authors put forward an emerging costs approach for examining the strength of a company. This enables the true nature of the assets and liabilities to be taken into account, including their essential variability. Simulation is suggested as a powerful tool for use in examining the financial strength of a company and in exploring the impact of alternative scenarios. A particular example of such a simulation model is then presented and used to explore the resilience of a company's financial position to variations in a wide variety of parameters. The model enables the user to quantify the probability that the assets will prove adequate to meet the liabilities with or without an assumption of continuing business. This in turn permits an appropriate asset margin to be assessed individually for any particular company in the light of the strategy that the company intends to follow. Some of the implications of this approach for the management and supervision of general insurance companies are explored. The suggestion is made that the effectiveness of statutory supervision based on the balance sheet and a crude solvency margin requirement is limited, since it cannot have proper regard to the risk profile of individual companies. More responsibility should be placed on an actuary or other suitably qualified professional individual to report on the overall financial strength of the company, both to management and to the supervisory authorities.

Rapid developments in genetic science have been accompanied by confusion regarding the predictive power of DNA-based tests and in the impact of such tests on the insurance industry. The United Kingdom actuarial profession has begun to engage in the associated social policy issues and to try to throw some light on the issues through quantitative research and objective analysis. At the same time, many insurance industry actuaries have been involved in work on behalf of the insurance industry to develop a sound basis for permission to be sought to make use of the results of certain predictive genetic tests. This paper briefly outlines some of the history of the development of the debate in the U.K. and draws together some of the debates and discussions which have taken place within the Genetics Group of the Social Policy Board of the U.K. actuarial profession, as well as providing some pointers to the directions which the debate might take in the future, with some important potential consequences for the insurance industry and for actuaries.

AbstractThe current state of knowledge on the epidemiology of HIV infection and AIDS is reviewed, with extensive references to the medical literature. The particular focus is on those aspects of the epidemiology of HIV infection which are of interest in the formulation of models for projecting the future spread of the virus and its impact in terms of numbers of cases of AIDS and deaths from AIDS.