On 20 January 2015, the London Market Student Group (LMSG) welcomed speaker Barnabas Hurst-Bannister, a former chair of the London Market Group with 40 years of experience in the London market. He is currently a non-executive director at Talbot, Price Forbes, Torus, Charles Taylor and the Standard Club, as well as formerly sitting on the Council at Lloyd's.
During his presentation, Hurst-Bannister observed that the advent of greater discipline within the insurance industry has led to much more specialist underwriting. He believes the lack of generalist underwriting could be an issue and suggests that the recent softness will persist over the next few years. When claims once again cause underwriting losses, capital will be sucked out of the market, and yet the cyclical nature of the business will continue.
Moving onto the topic of Solvency II and how it is a great source of work for many actuaries, Hurst-Bannister said the main issue with Solvency II is that the regime is trying to fix something that is not broken. When he first started work in the 1970s there was very little regulation, he revealed, adding that it is an important control but needs to be proportional to the situation.
To conclude, Hurst-Bannister gave his opinion on various aspects of actuarial work. He praised the intelligent and disciplined actuarial approach to pricing and raised the issue of using best-estimate reserving, as conservative reserving can lead to underwriters failing to take proper advantage of business offered.
A suggestion given to loosen the actuarial culture of prudence is to further understand the effect that an overly prudent estimate has on underwriting.
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