The newly formed International Underwriting Association (IUA) sees research and information for the market as one of its main roles. Marie-Louise Rossi describes some projects.
Learning to ask the right questions is as difficult as learning to give the right answers. In insurance and reinsurance, as much as in any other industry, particularly in competitive times, we must ask ourselves, not only how we respond and adapt to changing market forces, but how we can help shape and inform future challenges.
One of the main roles of a trade association is in the provision of information and commissioning of research. Away from the day to day responsibilities of underwriting, yet with the interests of the underwriter very much in the mind, the International Underwriting Association of London (IUA), formed on 31 December 1998, is already continuing the work of its predecessor organisations, LIRMA and the ILU, in its research activities.
We are putting the finishing touches to our biennial seminar programme, to be held in Stockholm this May, as well as specific projects outlined below: bodily injury awards for motor accident victims, the year 2000 problem, earthquake hazards and competitiveness and derivatives.
In January, the IUA announced the second phase of the bodily injury study, initiated by LIRMA. The United States has witnessed a growing claims culture and the development of a legal infrastructure and changes in the law to cope with this. Such trends are now becoming the norm in the UK, too, and insurers and reinsurers are looking for guidance on how best to cope with the rising tide of claims they are facing.
The IUA's research, which has the full backing of a wide range of professional bodies as well as the support of other interested trade associations, will cover more than 50% of motor accident claims made in the UK over a 10 year period. It will highlight trends in the claims culture as well as considering the legal, medical and other forces behind the statistics. In addition, our panel of experts will be contemplating the feasibility of an independent bureau to collate and analyse these statistics in the future.
One area where the UK falls significantly behind the US and some other parts of Europe is in rehabilitation. Whereas the rehabilitation record of motor accident victims in the US is around 30%, in the UK it is around half that figure. Our first UK bodily injury study, which is the most comprehensive analysis of claims trends in this area, concluded that improved rehabilitation services should be a priority for an insurance industry looking at the best and most cost-effective way of handling claims, while at the same time improving services to injured customers and third parties. This second phase of research is due to be published by the end of the year.
On a global scale, the year 2000 continues to be a topic of great concern to insurers and reinsurers alike. The IUA has issued a discussion paper to its members, prepared by solicitors Barlow Lyde and Gilbert. It emphasises that not just one, but a multitude of dates are likely to cause difficulties in the run up to the millennium and beyond. In the marine sector, for instance, we are aware that could there could be problems with the Global Positioning System for satellites, vital in the navigation of ships, on 22 August of this year.
In the meantime, the IUA year 2000 index, prepared by GartnerGroup, continues to be updated quarterly. Its data on year 2000 preparation - according to industry sector and country in question - provides a valuable tool to underwriters faced with the uncertainty of the risk. Also, in a joint training venture with Lloyd's, the IUA is staging a second year 2000 mock trial which will graphically illustrate some of the challenges insurers might face.
The perennial hazard of earthquakes in specific parts of the world seemingly limits options for insurers, but again, accurate, accessible information is the key. The IUA will continue the tradition of the annual ROA/LIRMA earthquake hazard atlas. The 1998 map concentrated on Colombia (where an earthquake occurred as this was being written); a publication on earthquakes in Mexico was revisited in mid-January, when the fourth and strongest quake struck in Oazaca province.Similarly, annual underwriting casualty statistics provide valuable data for underwriters looking to establish trends and pre-empt difficult decisions ahead. The IUA will continue to publish both LIRMA's annual reinsurance statistics and the comprehensive marine data which used to be published by the ILU.
Other research activities include a study on derivatives and one into competitiveness, which was commissioned from the London School of Economics by the IUA together with the Lloyd's Market Association and which is due out later in the year.
The IUA organises forum meetings for its members on topics of interest throughout the year. Stockholm will be the setting for the biennial IUA seminar where industry professionals will address the following key topics, such as developments in IT, the impact of the euro; the state of the industry - consolidation and the global market; and alternative risk transfer.
In this age of information technology, with facts and figures whirring around the globe, there are cries about information overload. But targeted information and research is invaluable for the underwriter assessing a risk and of this, it seems, there can never be enough.
Marie-Louise Rossi is the chief executive of the International Underwriting Association.