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CONTENTS OF THE APRIL 2003 ISSUE
Vol.71(1)
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Reinsurance Symposium Insurance and Risk
Management:
Orientations and Management The Canadian Reinsurance Market in 2003 La réassurance, cette méconnue Réassurance et assurance : similitudes, différences et
réglementations La réassurance a-t-elle besoin des réassureurs ? Les événements de septembre 2001 : quel impact sur
la valeur des compagnies de réassurance ? Le marché de la réassurance Evaluated article COLUMNS Faits d’actualité – Assurances et gestion des risques Chronique des chaires en assurance et en gestion des risques Les activités et travaux de la Chaire en assurance L’Industrielle-Alliance Chronique actuarielle Index des sujets et des auteurs – Avril 2002 à janvier 2003 The Internet Surfer Page
Insurance and Risk Management: Orientations and
Management Risk management has evolved in significant ways over the last decade. For example, whereas in 1996 most management schools offered no courses in this subject, today, all the programs in these same schools include at least one risk-management course. HEC Montréal alone exemplifies this evolution: at least eight doctoral students are now writing dissertations on different aspects of risk management; yearly, more than twenty students compose masters theses on the subject; and more than seventy business administration undergraduates take at least one course in risk management and insurance. Such courses are also given in the MBA program and in the management certificate program. In mid-March of this year, we held a career day for graduate students from Quebec’s various management faculties, displaying the numerous facets of the risk manager’s task in financial and non-financial firms. A number of these graduates will take up positions in risk management departments and become subscribers to our journal. The numbers cited above need to be multiplied by at least three to give an adequate estimate of Quebec graduates in management who have some knowledge of risk management and insurance. Finding jobs for these students is not a problem, because risk management is enjoying a growth spurt in both financial and non-financial sectors. Risk management comprises three essential steps: identifying risks, measuring them, and managing them. This last step is at once the most difficult and the most important. Underestimating this third step, too many firms or institutions limit their concern to the technical aspects of the first two. Essential to any effective risk-management strategy are well planned corrective activities. The 1998 ice storm or the events of September 11, 2001 shocked more than a few managers and highlighted the need to cover and manage risks well. Of course, it will not take a catastrophe to teach every firm or town this lesson. In the journal’s upcoming issues, special attention will be given to all three aspects of risk management—with the emphasis squarely on management. The Committee’s foremost decision dealt with the journal’s name. Starting with this issue, it will be Insurance and Risk Management. However, even before this change, the journal’s content was not limited to insurance. And so, the new title honours the journal’s history, while signalling an evolution in its current outlook and reflecting its content more accurately. This change should help the journal gain a more competitive position on markets in Quebec and abroad. As forty per cent of the journal’s content is now written in English, its new bilingual title is amply justified. It will no doubt boost penetration of the English-speaking market and get the journal indexed on international reference sites. Most researches surfing these sites enter key words such as "insurance" and "risk management" to start their search. These two words will henceforth be strongly associated with our journal. The three Canadian university chairs working in the field of insurance and risk management (Laval, Calgary, and HEC) will still be involved in running the journal and their members will be called on to submit articles on applied research in insurance or risk management. In order to encourage more universities to produce articles that appeal to reader interest, the journal will maintain its editorial policy of publishing two categories of articles—the first featuring unreviewed articles of general interest and the second, articles reviewed by anonymous peers. This will make it possible to attract articles from authors who, as researchers, are obliged to give priority to peer-reviewed articles. Articles will still be reviewed by an international committee of insurance and risk-management specialists. Committee members have agreed to continue publishing, periodically, thematic issues on subjects of concern to readers and researchers. Two themes were selected for coverage in the last two issues: bancassurance and reinsurance. Another issue on reinsurance is in progress. Not only do thematic issues serve to group several articles around the same theme but also to attract top quality collaborators. They feel more strongly involved when invited to write for a thematic issue linked to their research or management concerns. We shall also continue to put on thematic symposiums to help in financing the journal and in feeding its content. New columns have been added on risk management to keep our readers abreast of new developments and to disseminate the different ideas, techniques or models emerging in this field. Over recent months, we have consulted a number of persons, including our readers, concerning the different potential orientations for the Journal. We have also consulted with an expert in market analysis for specialized journals to find ways of gaining a better position in a highly competitive international market. We trust that we have taken the best decisions for our readers and for the future of the journal. Finally, we decided to resume management of our subscription services, so as to play a more active role in the distribution of our journal, and, thus, to keep our clientele more sharply in view. Thank you for faithfully encouraging us and helping us to develop a unique journal capable of publishing groundbreaking content and of keeping you on top of the most significant news in the field of insurance and risk management.
The Canadian Reinsurance Market in 2003 Admittedly, the previous decade was not the best for the reinsurance industry. In this article, the authors provide an overview of the current reinsurance market conditions by reviewing the dramatic changes in the market which occurred since the late 1990’s and then look at the current reinsurance situation both in Canada and globally. Here are the main themes discussed by the authors : Canada’s Place in the Global Reinsurance Market, Impact of September 11, 2001 on the Reinsurance Market, 2002 Renewals, Current Reinsurance Market Conditions, Underlying Challenges and Major Risk Exposures, 2001 Global Catastrophes, Declining Investment Yields, and 2003 Renewals for Canadian Insurance Business. Keywords : reinsurance markets, major risk exposures, global catastrophes, renewals, investments.
La réassurance, cette méconnue The unknown reinsurance is not esoteric but full of mystery and complexity from the insured standpoint, which is not directly concerned by the operation, that conducts an insurer, called the ceding company, to be financially secured by a reinsurance company, under several reinsurance mechanisms, regardless of the insurance wording. Considering that the reinsurance is a distinct contract or agreement, i.e. the reinsurer does not have any direct relationship with the policyholder, nevertheless the reinsurer is obligated, following a loss of event, to accept, as the basis for his own liability under the reinsurance treaty, any claim made against the ceding company covered by the contract of insurance (Follow-the-fortunes principle). The author tries to globally review the nature and the roles of reinsurance and points out some particularities of the world reinsurance market. Current conditions in the market are dramatically changed in the wave of the massive losses related to September 11, 2001. Today, reinsurance is a subject of particular concern to those responsible for regulating the industry and also of increasing interest to the financial community as a whole. Keywords : reinsurance, function of reinsurer, treaty reinsurance, facultative reinsurance, market, catastrophic event.
Réassurance et assurance
: similitudes, différences et réglementations For the layman, insurance and reinsurance companies are frequently mixed in the same entity. Actually, those two branches of the insurance industry are different; regulation especially, strongly differentiates them. Insurance companies are everywhere in the world heavily regulated; reinsurance companies are almost nowhere regulated. This paper analyses the differences between insurance and reinsurance. It poses the problem of the opportunity and the feasibility of an international regulation for the reinsurance companies. This paper also analyses the aims and goals the future regulation ought to comply with. Keywords : reinsurance, international regulation.
La réassurance a-t-elle besoin des réassureurs ? Keywords : reinsurance, enhanced mutualisation, venture capital, certification.
Les événements de septembre 2001 : quel impact sur la
valeur des compagnies de réassurance ? The authors study the decrease of value of the insurance/reinsurance companies, both on short and mid-term basis in the wake of the September 2001 New York attack. They come to the conclusion that the decrease of values of reinsurance companies are more significant than those of other insurers, because the financial market is considering that the reinsurers are subject to a stronger risk exposure. Keywords : reinsurance, abnormal profitability, risk, SCOR.
Le marché de la réassurance The goal of this article is describing reinsurance principles and major forms of reinsurance: proportional reinsurance, non proportional reinsurance, compulsory reinsurance and facultative reinsurance. The author concludes on the reinsurer’s performance mitigated by several catastrophic events in the recent years, the need of financing losses and the importance of setting up new protection mechanisms. Keywords : reinsurance, treaty, proportional reinsurance, non proportional reinsurance, compulsory reinsurance, facultative reinsurance.
Risque individuel et choix de contrat : le cas de l’assurance
automobile In this article, the main question is as follows : does the choice of an insurance policy by the policyholder, reveal the level of risk incurred by the insurance company and does it tell us about the policyholder’s risk aversion in this situation of exchange under asymmetric information (moral hazard and adverse selection)? Different studies have shown that the choice of a level of coverage is mainly determined by the value of the vehicle. The two representative variables of risk in frequency (i.e. objective coefficient of risk and "bonus-malus") also intervene but with limited effects. The level of coverage increases with both the value of the vehicle and the indicator of risk. The policyholder, through the choice of a deductible, mainly shows his aversion to the loss of the investment that he has just made. He is sensitive about it in absolute value and not in terms of assets loss. It is essential for the policyholder to protect his investment. At this level, the relative risk of each individual, either the "official" information of the "bonus-malus" or the objective risk (calculated by the insurer) is not very important. The individual risk aversion is mainly due to the maximal level of loss and not to the expected loss. Keywords : automobile insurance in France, asymmetric information, adverse selection, risk aversion, choice of deductible.
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Last updated: April 7, 2003
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