Actuaries are increasingly taking a more strategic role in understanding business risks and finding better ways to quantify and manage those risks.
Milliman consultants combine their expertise with a proprietary suite of powerful modeling tools to help companies better understand the nature of their risk exposures and the potential variability in their reserve estimates. Our consultants are experts at using these tools to model and understand the most sophisticated insurance risks. We can also help you explain your results to important audiences such as corporate executives, regulators, rating agencies, and board members.
Using our modeling tools, we can:
- move beyond traditional point estimate techniques to estimate distributions of possible losses, both for individual lines and company-wide correlated totals
- provide a clearer picture of how to more effectively allocate capital among business units
- supply key input into economic capital models, especially regarding reserving and pricing risk
- offer important insight into reinsurance requirements, including aggregate retentions and stop-loss calculations
Client example: Evaluation turns up better-than-hoped for position
A major international reinsurer recently came to us for help evaluating how well it was covered under a loss portfolio transfer (LPT) on a particular block of business. This issue was important to the client because the block demonstrated significant volatility in past results. Our challenge was to help this client assess its potential exposure, including how much exposure might exist beyond the cover, and to give it a clearer understanding of the potential risks so it could make better informed business decisions. We used our modeling solutions and experience in loss variability to provide the client with a distribution of possible ultimate losses for the business. In this case, the insurer was assured by our estimate that its current LPT provided sufficient coverage for all but 0.1% of future possible modeled outcomes.
Tools available for all insurers
Our Reserve Variability Model™ software is not simply a consulting tool. It's a solution that was designed to be installed and used by insurers to better understand their business. We help clients learn to use this tool effectively and customize it to suit each client's specific needs and environment.