Spring 2019 Q18

slocksonslockson
in BCAR.Cat

Hi Graham, For Spring 2019 Q18(d), we are asked to:

I feel like in order to improve an AM Best rating, only the factors that AM Best considers important should be considered. According to the source reading, the 4 important factors are: Models, MML (measure, monitor and limit), Aggregated exposure and Data quality. However in the examiner's report, a lot of other factors (from OSFI Earthquake) were accepted.

My guess is that the AM Best list is not exhaustive and that other factors from OSFI.Earthquake also make sense and would improve an insurer rating. I'm not really sure how important the distinction between EQ risk management from OSFI.Eq and BCAR.Cat are?

Comments

  • grahamgraham

    I've noticed in past examiner's reports that for questions like this, the graders are more willing to accept a wider variety of answers. This is more of an open-ended question and they seemed to accept any answer that could reasonably be expected to improve an insurer's catastrophe risk management. And if an action improves catastrophe risk management, it should theoretically improve the Best rating as well even if it isn't stated explicitly in the source reading. The 2 readings on A.M. Best are basically just overviews anyway.

    So, you're right that the list from the Best reading is not exhaustive, and the list from the OSFI earthquake reading isn't exhaustive either. When you're talking about qualitative considerations, there are probably many, many valid answers.

  • slocksonslockson

    Great, thank you for your thoughts!

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