Andy Sharpe, chief risk officer for UK, Asian, Australian and African life reinsurance at Munich Re
What will be the main risk management challenge in 2016?
From a personal perspective, having changed jobs recently, moving from Prudential to Munich Re, it is understanding the risk profile, the risk space by a reinsurer compared to a direct insurer, and really making sure that I apply techniques and skills of risk from one environment to another.
If you think about the industry, there will be some interesting challenges. First of all, getting to grips with changes that were made to get your Solvency II model approved, and how they will actually flow through into the company, into the reporting, into the products.
But also dealing with all the things you ought to have dealt with when you were busy doing Solvency II, and goodness knows what there is in that to-do pile now, that just was not tackled.
If you could change one aspect of the regime, what it would be?
I would like there to be a greater focus on the total amount of money that is supporting the business, as opposed to the just the focus on the capital and the risk margin. It is really critical from anybody's perspective that the company has a total quantum of money, rather than just the capital. That goes back to my old actuarial days of overall sufficiency. At the moment, you tend to talk a huge amount about the capital, but not a huge amount about the best estimate liabilities. Maybe concentrating more on that total amount of money back in the liabilities would be something I would focus on.
Another thing I would change is the way it was implemented. Gradually bringing Solvency II as private submission, until the regulators, the agencies, the companies were used to dealing with it and then making it public – that is an approach I would prefer to have taken, as opposed to make it public straightaway. The way the ICA [Individual Capital Assessment] was brought in by the PRA [Prudential Regulation Authority] would be an attractive way to do it, because it allowed everybody to get their heads around it.
What was the most memorable moment during Solvency II preparations?
Probably working through ORSA [own risk and solvency assessment] in a way that we built an ORSA framework that I realised could apply to any company. This is something that I have discussed with InsuranceERM before. Developing a framework that you could lift and embed into any company and working out how to operate that with any company, rather than just in Prudential, which was the company I was working for, made me realise you can bring this whole thing to life and apply it wherever, and actually driving it through the way the company was run, as opposed to this risk or that risk. There is a moment when you think you can even apply that outside the industry. It started to bring forward some of the ways you can communicate it, and that for me was sort of an eye opening moment.
