adapting long-tail pricing models: scope for shared learning – india & china 2014 cicirm, july...
TRANSCRIPT
![Page 1: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/1.jpg)
Adapting Long-tail Pricing Models:Scope for shared learning – India & China
2014 CICIRM, July 23-26, 2014, Shenzen, China
By: Praveen Gupta
![Page 2: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/2.jpg)
The Roadmap
• WHAT’s the challenge?1
• WHY does it need to be addressed?
2• HOW could
it be done?3
![Page 3: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/3.jpg)
The Challenge
• Adapting long-tail liability class in a new jurisdiction, for the first time
• Key issue: Pricing - no past experience on frequency & severity of claims. Adapted from overseas environment
• Rise of Tort and beyond: To test pricing adequacy
• What do markets do to avoid rude shocks - in - making?
• Dealing with rub - on - effect of pricing pressures from short tail classes
• Despite significant differences, there is lot for China & India to collaborate
![Page 4: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/4.jpg)
Why?
• Manufacturing Consumption
• As we bridge this gap the risks will be those manifesting in domestic market, not overseas location
• At best global programmes of multinationals originating from these countries
• Pricing increasingly a function of local demand and playfield
• Understanding local dynamics and flux
• Balancing what you can change & what the market wants
• Multipliers: HK Auto Unlimited TPBI
• Retroactive focus: Class action & much more: India
• Buildup of systemic Toxicity: HIH look remote!
• Mitigating potential surprises
• The two could be the largest liability markets in the world
• As the markets grow there may be a temptation towards higher retentions
![Page 5: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/5.jpg)
How?
• Rise of tort/ consumerism: cycles in two societies may be different
• Need to understand emerging societal character & personality
• Building knowledge pool best practices
• Reserving practices
• Awards & judgments
• Management expenses
• Reinsurance cost & quality
• Acquisition cost
• Inflation
• Investment income
• Regulatory controls
• Legal expenses
• Servicing capability
• Demand & popularity of the products
![Page 6: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/6.jpg)
Road ahead
• The two societies may be overtly very different
• Change will drive convergence for common needs to deal with challenges
• From big data, practices, processes, knowledge the list of collaboration could be very comprehensive
• Time starts now!
![Page 7: Adapting Long-tail Pricing Models: Scope for shared learning – India & China 2014 CICIRM, July 23-26, 2014, Shenzen, China By: Praveen Gupta](https://reader036.vdocuments.us/reader036/viewer/2022083009/5697bfbf1a28abf838ca33e2/html5/thumbnails/7.jpg)
Thank You