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SIGMA’s 2011 Collateral Survey Results

In the last quarter of 2011, SIGMA Actuarial Consulting Group conducted a survey of insurance brokers, risk management consultants, and risk management staff of self-funded concerns to participate in a survey regarding collateral.  This survey was similar to the ones conducted by SIGMA in 2009 and 2010.

The goal of the survey was to assess, on a national basis, trends in collateral negotiations, exposures, reviews, arbitration, litigation, and other factors that SIGMA actuaries have been seeing with our own clients since the financial crisis of 2009.  The initial 2009 survey highlighted several trends in increased collateral cost and difficulty securing credit.  The results from 2010 and 2011 indicate that collateral difficulties continue.

Executive Summary of ResultsCollateral Survey
Results of the 12-question survey, which received 159 respondents, largely confirm the trends SIGMA has observed in its consulting practice.  The highlights of the survey show:

  • The percentage of respondents indicating that most of the parameters of the agreement were negotiated prior to the policy inception has decreased since 2009.  In the 2011 survey less than half of the respondents indicated most of the parameters were negotiated.
  • In 2011 there was a significant increase in the number of respondents indicating that their carrier completed a review as scheduled.
  • In 2010 many comments indicated that credit risk assessments may now be affecting collateral calculations in several ways: surcharges, increased risk margins, or reductions in paid loss credits.  This was still an issue in 2011, but was mentioned with less frequency.

The report includes details of the survey, including commentary for each question.  At the end of this report, we present recommendations for improving an entity’s collateral picture, and a list for further reading.

Please download this complete survey analysis, by registering for our free resource portal at:

www.SIGMAactuary.com/resources

For Further Information:

Contact Michelle Bradley, ACAS, MAAA, ARM at 866-228-8279 x 204 or mb@SIGMAactuary.com

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Michelle Bradley, ACAS, MAAA, ARM, CERA

About Michelle Bradley, ACAS, MAAA, ARM, CERA

Michelle graduated summa cum laude as valedictorian from Lipscomb University in 1988, receiving a B.S. Degree in Mathematics. She then attended Vanderbilt University and received a M.S. degree in Mathematics. Michelle is an Associate in the Casualty Actuarial Society and is a Member of the American Academy of Actuaries. She also obtained the Associate in Risk Management designation in 1996 and received the award for academic excellence in that program. She served as president for the Casualty Actuaries of the Southeast for the 1999-2000 year. From 1990 to September 2003, she was Vice President and Consulting Actuary for Willis Risk Solutions of Willis North America. During this time she consulted extensively in the areas of actuarial, risk management and enterprise risk management. Michelle received the CERA (Chartered Enterprise Risk Analyst) designation in 2013. She has also served on the board of directors for the Society of Risk Management Consultants. She currently serves on the Advisory Council for Middle Tennessee State University’s Master of Science in Professional Science Program (MSPS). In the area of enterprise risk management, she has focused on modeling issues as regards integrated programs that often include non-traditional risks. She has significant expertise in risk mapping and alternative risk transfer mechanisms. She has been a member of numerous project teams that provided enterprise risk consultancy services and was part of the project team that completed the integrated program that was hailed the “Deal of the Decade” by CFO Magazine (June 2000).

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Resources

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Questions? Contact SIGMA…

SIGMA Actuarial Consulting Group, Inc.
5301 Virginia Way, Ste 230
Brentwood, Tennessee 37027
PHONE:    866.ACTUARY     866.228.8279
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