Run-off is a strategy adopted by an insurance/reinsurance company once a decision to discontinue writing business has been taken.
This book examines the best ways that a company can formulate a discontinued business strategy, and also explains the process of an insurer/reinsurer.

Author(s): Wedge, Peter
Published: 2001
Binding: Paperback
ISBN 10: 1856092119 ISBN 13: 9781856092111

1 Introduction

            1.1       Introduction

            1.2       The Distinction Between Insurance and Reinsurance

            1.3       The Definition of Run-Off

                        1.3.1    Company Market

                        1.3.2    Distinction of Run-Off

                        1.3.3    Lloyd’s Syndicates

 

2 Background

            2.1       Growth of the Run-off

                        2.1.1    Past Growth

                        2.1.2    Future Growth

                        2.1.3    Consolidation in the Insurance and Reinsurance Market

                        2.1.4    The effect of the consolidation on the size of the run-off market

            2.2       The Size of the Discontinued Insurance Market

                        2.2.1    Introduction

                        2.2.2    Global Size

                        2.2.3    UK Size

                        2.2.4    USA Size

            2.3       A Short Run Analysis of Particular Reasons for Going into Run-Off

                        2.3.1    Introduction

                        2.3.2    The Growth in Latent Claims

                        2.3.3    Increase in Catastrophes

                        2.3.4    The Insurance Cycle

2.4       Case Study of Entry into Run-Off: the Formation of Equitas to Run-Off Certain Lloyd’s of London’s Liabilities

            2.4.1    Lloyd’s of London Experience

            2.4.2    Equitas

 

3 Developing a Strategy for Discontinued Business

            3.1       Introduction

            3.2       Compiling a Strategy for Discontinued Business

            3.3       Goals – Stage 1

                        3.3.1    The goal of run-off

3.3.2    The difference stakeholders in an insurance/reinsurance organisation

3.3.3    Prioritisation of stakeholders

3.3.4    Goals of policyholders

3.3.5    The goals of employees: Management; Brokers; Regulator; Reinsurer; Guarantor; and Third Party run-off manager.

            3.4       Analyse – Stage 2

                        3.4.1    Collecting relevant information

3.4.2    Analysing the information and projecting past and present conditions into the future

            3.5       Design – Stage 3

                        3.5.1    Insurance solutions

                        3.5.2    Non-insurance solutions

            3.6       Implement – Stage 4

            3.7       Review – Stage 5

 

4 Management and Organisation

            4.1       General Considerations

            4.2       Departmental Organisation

            4.3       Possible Departmental Structure

                        4.3.1    Commutations Department

                        4.3.2    Inwards Claims Department

                        4.3.3    In-house Legal Department

                        4.3.4    Reserving Department

                        4.3.5    Internal Audit Department

                        4.3.6    Finance Department

                        4.3.7    Outwards Claims Department

                        4.3.8    Personnel Department

                        4.3.9    IT Department

            4.4       Setting Objectives for Each Department

 

5 The Role of the Regulator

            5.1       Introduction

            5.2       The need for Regulation of Insurance and Reinsurance Companies

            5.3       Types of Regulation

            5.4       Authorisation of Insurers

            5.5       The Regulator’s Powers of Intervention

                        5.5.1    Withdrawal of authorisation

                        5.5.2    Other Powers

            5.6       Insolvency of Insurers

            5.7       Forthcoming Changes in Legislation

            5.8       New Rules for Insurance Companies That Have Ceased to Trade

 

6 Shortcomings of Current Solutions

            6.1       Categorisation of shortcomings

            6.2       Problems specific to the run-off solution

 

7 New Solutions

            7.1       Project Jupiter

                        7.1.1    The concept

                        7.1.2    The key benefits

            7.2       Pooling Outwards Reinsurance Collections

            7.3       Equitas II Model

                        7.3.1    The concept

                        7.3.2    Feasibility

                        7.3.3    Hypothetical advantages of the Equitas II model:

            7.4       Fixed Run off Period

            7.5       Statutory Run-off

            7.6       New Form of Scheme of Arrangement