PACICC makes it a priority in 2013 to analyze role of actuaries in loss reserving best practices, supervisory practices

The Property and Casualty Insurance Compensation Corporation (PACICC) – which protects Canadian policyholders from a loss in the event of an insurance company insolvency – plans to examine best practices in loss reserving in 2013.
The analysis would include how actuarial services and supervisory practices are used in valuing insurers’ risks.
PACICC outlined its priority, contained in its three-year strategic plan, at the corporation’s annual general meeting in Toronto on Apr. 27.
“We [are] looking at the role of actuarial practices in the management of solvency risk in our industry — in particular, the regulatory and legislative expectations of actuaries,” PACICC president and CEO Paul Kovacs said at the meeting.
“OSFI [The Office of the Superintendent of Financial Institutions, Canada’s solvency regulator] has been very aggressive in promoting things like sensitivity analysis, dynamic capital solvency testing [and] peer review,” Kovacs said. “A number of [best practices] OSFI has actively pursued appear to be reducing the risk of insolvency in federally supervised companies.
“Provincial legislation doesn’t necessarily allow the provinces to the same thing. Provinces are at different points in encouraging similar actuarial practices at the provincial level. And we have not seen a reduction in provincial insolvencies.”
Kovacs said the proposed work of PACICC would include a discussion of whether provincial regulators might be able to apply the same actuarial practices promoted by the federal solvency regulator.
PACICC intends to explore working with the Canadian Institute of Actuaries and with insurance supervisors on this initiative.
The priority for 2011 includes proposing reforms for more streamlined and less expensive liquidations under the federal government’s Winding-Up and Restructuring Act, including changes that would make it easier to wind up an insolvent financial conglomerate.
The priority for 2012 includes surveying PACICC’s member companies to help benchmark the current state of enterprise risk management (ERM) practices.