Americas Insurance Fall 2011 Digest
Oliver Wyman is pleased to launch the premier edition of our Americas Insurance Digest. This regular digest of Oliver Wyman publications will examine key trends and important drivers of change in the Life and P&C sectors.
This edition spans corporate strategy in the Life sector, capital management in the P&C sector, challenges facing all insurers arising from regulatory reform, and outsourcing opportunities in IT/Operations.
Winning the Low Interest Rate Challenge
An extended period of ultra-low interest rates is a real prospect for the US economy. For Life insurers, this will mean spread compression, lower investment income, higher statutory reserve requirements, slower sales, DAC write-downs and goodwill impairments. We discuss a range of real and tangible actions that insurers can take to address the low interest rate challenge.
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The Implications of Financial Regulatory Reform for the Insurance Industry
Policymakers are developing new regulatory regimes aimed at ensuring enhanced financial stability in the post-financial crisis world. While the objectives of each of these initiatives may be clear, their interdependencies are not, and inconsistencies between regimes could adversely impact risk management practices at insurers and banks. This paper explores these issues and highlights incentives that these differences appear to provide.
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Time for a Check-up: Capital Model Validation in P&C (Re)insurance
Many insurers fail to realize the informational value of their capital models, often despite having made significant investments to do so, because of a critical shortcoming in their model development cycle: comprehensive validation. This report outlines the components of successful model validation and its importance in building credibility with key constituents. It also identifies common model pitfalls faced by insurers.
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Is Full Applications Outsourcing Back on the Table in Financial Services? Implications for the Insurance Sector
For many insurers, a handful of prior experiments have convinced them that the risks associated with outsourcing their IT applications development and maintenance (ADM) functions are not worth taking. This report aims to debunk conventional thinking around full ADM outsourcing, and proposes a systematic approach to assessing the potential benefits and associated risks.
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