Twenty Third Floor
Technical Business Advantage

Humans, unlike other creatures, have the  incredible ability to consciously think about tomorrow. We can imagine different scenarios playing out, and plan for them accordingly. The same approach also allows us to consider the impact of our actions on others in simple and sometimes complex ways. We’re not just squirrels hoarding nuts because we feel it’s right deep within our bones.

It’s a pity we fail so miserably to make use of these skills.

Innumerable and seemingly unconnected issues stem, at least partly, from the focus of individuals and lobby groups on immediate self-interest. We are the me, now peoples of the world.

Unions in Spain are protesting the increase in retirement age from 65 to 67. It’s understandable they’re unhappy – many of them having worked for many years to be told they need to work longer. The problem is, people are living longer so the cost of retirement is greater. Workers are healthier at 65 now than they were at 60 not that many years ago. Spain is struggling with a crippling budget deficit. The cost of retirement will be born by others, in the future. For the me, now peoples of the world, somebody else’s problem at a distant date in the future is not a problem at all. (more…)

They should charge more.  Hotels and B&Bs, your uncle’s Seapoint flat, airlines and taxis and the guys polishing shoes at the airport and garden services mowing lawns should all charge more during the world cup.

“But they’re profiteering” you cry!  Well, yes, in a word. But if the incredible expense of building stadia in the shape of donuts and white elephants is to be recouped, someone has to make some money out of the whole deal. (more…)

What about the NHI sounds like a bad idea? Free, universal, comprehensive medical care – it’s a great ideal.

What about our current healthcare setup sounds good? A small proportion of the population have access to excellent healthcare, but the vast majority have “access” to public health comprising long queues (often after long walks) to understaffed, understocked hospitals with demotivated doctors and hospital managers who combine the worst elements of overworked and disinterested. Clearly, not much. Did I mention that the tax structures around medical scheme contributions have benefitted the wealthy over the poor?

If the obvious solution seems to be solving this problem by changing from our current system to the new proposed NHI, I have some bad news. The problem identified above isn’t a healthcare problem. At least it’s not only a healthcare problem. (more…)

CEIOPS issued additional guidance around the standard formula for calculating capital requirements in respect of operational risk late last year.

Why was a new OpRisk formula needed?

The original formula for OpRisk proposed in QIS4 was widely condemned. Complaints included being too simplistic, being insensitive to risk (and basely primarily on business size) and the impossibility of calibrating to 99.5% in a meaningful way. CEIOPS accepts most of this criticism, but counters by reminding stakeholders that the aim of the standard formula is partly about being simple.

A more serious problem is that in comparison against companies’ own internal models, the standard formula produced results lower than companies’ own assessment. Median internal model requirements for OpRisk were 133% of the standard formula and 13 out of 16 countries reported higher requirements under their insurers’ internal models.

One of the aims of the standard formula is to be slightly conservative to provide an incentive for insurers to develop their internal models. Clearly this objective is not being achieved. (more…)