Twenty Third Floor

Figuring out the future and the now

Category: insurance

Actuarial and Risk, capital, insurance, life insurance, measurement, news, operational risk, Solvency II

New operational risk guidance from Solvency II

1 February 2010

David Kirk

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…
Read more: New operational risk guidance from Solvency II
Actuarial and Risk, banking, capital, credit risk, currency risk, financial risk, insurance, life insurance, managing uncertainty, market risk, measurement, operational risk

Allocating capital to insurance products

16 October 2009

David Kirk

A friend “volunteered” me to answer an insurance question from Aardvark on allocating economic capital across different insurance products. After writing a short response, I received the frighteningly useful message: “Error”. Having written a brief summary of the different techniques used in this really important area, I thought I should use it as a blog…
Read more: Allocating capital to insurance products
communication, customer value, distribution, economics, insight, insurance, measurement, news

More medical trouble

6 September 2009

David Kirk

After my last post around common misunderstandings of how medical schemes operate,Â I saw a Fin24 article on South African medical schemes that are below the required minimum solvency. What Fin24 readers had to say Nolulamo Matutu from Fin24 writes: Acting CEO of the CMA Patrick Matshidze told MPs 18 schemes have fallen below the…
Read more: More medical trouble
economics, insurance

Medical scheme mysteries – your benefit is my loss

4 September 2009

David Kirk

The separation of medical schemes and administrators is poorly understood. This confusion leads to any number of misguided arguments about the miserliness of the industry. There are plenty of other, better reasons to complain, but that’s a different post! Medical schemes Medical schemes are non-profit entities established to provide medical cover pooling and administration to…
Read more: Medical scheme mysteries – your benefit is my loss
economics, financial risk, insurance, life insurance, managing uncertainty, news, property

Is South Africa sheltered or delayed?

13 August 2009

David Kirk

The South African Reserve Bank today lowered the REPO rate by a further 50 basis points, down to the level last seen in 2005 and the lowest the REPO and BA Rate have been in nearly 3 decades. Surveys leading up to the announcement and analysis of market interest rates suggests that the expectation was…
Read more: Is South Africa sheltered or delayed?
credit risk, currency risk, financial risk, insurance, investments, life insurance, managing uncertainty

Massive currency risk

19 March 2009

David Kirk

In my previous post I discussed some of the risks to various currencies. Now what happens if your local currency is pegged to the US Dollar as it is in Lebanon? Speaking to Lebanese bankers and insurers there seems to be a devout beliefÂ that the peg is rock solid.Â This is surprising given the…
Read more: Massive currency risk
Actuarial and Risk, currency risk, economics, hedging, insurance, life insurance, managing uncertainty

Where’s the safe?

19 March 2009

David Kirk

Currencies aren’t what they used to be. The US Dollar can no longer be viewed as a safe bet as Obama and Bernanke spend their way out of a crisis partly fueled by too much spending. Inflation will come, it’s just a matter of time. Warren Buffet thinks so too. The current relative strength of…
Read more: Where’s the safe?
Actuarial and Risk, economics, financial risk, hedging, insurance, investments, life insurance, market risk, news

There goes the long end

18 March 2009

David Kirk

The Fed joins Bank of England and Bank of Japan in repurchasing government bonds. photo credit: amber.kennedy This actions (quantitative easing) increases the prices of bonds (more demand, diminishing supply) pushing down long-term yields. Great if you own bonds, not so great if you are an insurer with imperfectly matched long-term liabilities. Given how difficult…
Read more: There goes the long end

About David Kirk

Featured Posts

The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
by David Kirk
Parametric insurance is often marketed as the “clean” alternative to traditional risk transfer. The pitch is compelling: if a hurricane hits a specific GPS coordinate… Read more: The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
The Complexities of Comparing SCR Cover Ratios Across Insurers
by David Kirk
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios… Read more: The Complexities of Comparing SCR Cover Ratios Across Insurers
One answer could be pet insurance
by David Kirk
I firmly believe major demographics shifts are going to have massive social, political, economic, financial market and commercial impacts in the coming decades. The balance… Read more: One answer could be pet insurance
A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
by David Kirk
Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector.… Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
How and why insurers fail
by David Kirk
I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into… Read more: How and why insurers fail
The hidden dangers of opinion shopping and trusting good news.
by David Kirk
I had a recent discussion on the value of getting a second opinion. There’s the old line that “if you want five opinions, ask three… Read more: The hidden dangers of opinion shopping and trusting good news.
40,000
by David Kirk
40,000. That’s the ballpark figure I usually work with as the minimum number of micro insurance policies required for scale. The expenses of running even… Read more: 40,000

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