Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Gen Re announced the results of the 2012 U.S. Enterprise Risk Management (ERM) Survey.
According to a release, the survey focused primarily on the setting of biometric risk assumptions, which has been ignored by other ERM research. In addition, the survey addressed hedging and reinsurance, and preparedness for the National Association of Insurance Commissioners (NAIC) Own Risk and Solvency Assessment (ORSA).
On a combined basis, the 26 participants reported having over $148 billion premium in force as of 12/31/2011, or a little over 25 percent of the Life/Health industry.
Since the bulk of the data was collected prior to the NAIC's finalization of ORSA requirements, it is no surprise that a majority of companies felt they had much work to do to file such a report. However, it was also apparent that most companies had begun preparing to file an ORSA.
The survey found the use of ERM work continues to evolve. Many companies started the practice to enhance their demonstration of effective risk management to rating agencies. Today companies are broadening the focus and use of the studies, and several companies reported their senior management and board of directors use ERM to guide their decisions. The survey indicated more companies will begin using ERM for strategic planning including which lines of business the company should emphasize.
In setting biometric assumptions it appears companies tend to use realistic assumptions and then run stress tests to determine the impact on the company of conditions other than expected. Most tests were done on a deterministic basis but some also ran stochastic scenarios. In managing their risk appetite, most companies look to reinsurance as the means to manage their exposures.
A full copy of the report is available to survey participants only. We encourage any life and health insurer interested in participating in future surveys to contact a Gen Re marketing representative.
Gen Re, a Berkshire Hathaway Company, is a property/casualty and life/health reinsurers.
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