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General Insurance Track Reading Materials

Introduction to General Insurance Exam


The Institutes CPCU publications covering the following topics:
o Overview of Insurance Operations
o Insurance Regulations
o Insurance Marketing and Distribution
o The Underwriting Function
o Underwriting Property and Liability Insurance
o Risk Control and Premium Auditing
o The Claim Function
o Adjusting Property and Liability Claims
o Reinsurance
o Personal Auto Policy
o Homeowners Coverage
o Commercial Property Insurance
o Commercial General Liability Insurance
o Workers Compensation and Employers Liability Insurance
o Specialty Coverages

Introduction to Ratemaking and Reserving


SOA textbook, by J. Friedland, Fundamentals of General Insurance Actuarial Analysis, covering the
following ratemaking and reserving topics:
o Projecting Ultimate Claims
o Financial Reporting
o Trending
o Ratemaking
o Monitoring Results
Understanding the ratemaking with excess and retrospective policies using Lees CAS Proceedings
paper The Mathematics of Excess of Loss Coverages and Retrospective RatingA Graphical
Approach
Understanding the nature and application of catastrophe models using the Grossi and Kunreuther
textbook "Catastrophe Modeling: A New Approach to Managing Risk

Financial and Regulatory Exam U.S.


Financial reporting topics are covered in a number of resources including:
o SOA textbook General Insurance Financial Reporting Topics (including chapters on
introductory accounting, accounting under different standards, NAIC Annual Statement
pages and schedules, federal income taxes)
o NAIC Annual Statement Blank
o Excerpts from NAIC, Accounting Practices and Procedures Manual (including Preamble
and SSAPs 3, 5R, 9, 53, 55, 62R and 65)
o Brehm and Ruhms Variance paper Risk Transfer Testing of Reinsurance Contracts,
o Teng and Perkins CAS Proceedings paper Estimating the Premium Asset on
Retrospectively Rated Policies
Financial health measurement topics are covered in a number of resources including:
o SOA textbook, General Insurance Financial Reporting Topics (including chapters on
measuring financial strength with financial ratios, solvency monitoring and financial
ratings)
o NAIC White Paper on The U.S. National State-Based System of Insurance Regulation and
the Solvency Modernization Initiative
o NAIC ORSA Guidance Manual
o Vaughans Networks Financial Institute at Indiana State University Policy Brief The
Implications of Solvency II for U.S. Insurance Regulation,
Topics regarding responsibilities of the actuary are covered in a number of resources including:
o SOA textbook, General Insurance Financial Reporting Topics (chapters Overview of the
General Insurance Statement of Actuarial Opinion)
o Relevant ASB ASOPs (1, 20, 21, 36, 41, 43)
o IAA ISAP 1
o AAA COPLFR, A Public Policy Practice Note, Statements of Actuarial Opinion on Property
and Casualty Loss Reserves
o AAA Task Force on Materiality Discussion Paper, Materiality, Concepts on
Professionalism
o IAA paper The Function of the Actuary in Prudential Supervision
Topics on the regulatory environment for insurance are covered in a number of resources
including:
o The Institutes textbook Insurance Regulation
o SOA study note Government Provision of General Insurance covering multiple lines of
business for a number of countries
o SOA study note on Usage Based Insurance and Telematics
o Vaughans Journal of Insurance Regulation paper The Economic Crisis and Lessons from
(and for) U.S. Insurance Regulation,
o Insurance Bureau of Canada document Code of Conduct for Insurers use of Credit
Information (CODE)
o Canadian Council of Insurance Regulators paper Use of Credit Scores by Insurers
o Edmunds UK Parliament briefing paper Insurance and the discrimination laws: motor
and travel insurance,
o AAA Monograph The National Flood Insurance Program: Past, Present and Future?
o Pankow and Robbens NAIC CIPR Newsletter Biggert-Waters Flood Insurance Reform Act
of 2012
o Facility Association of Canada Position Paper Considerations for Residual Market
Regulation
o Excerpts from the Mayer Brown publication Understanding the New Financial Reform
Legislation: The Dodd-Frank Wall Street Reform and Consumer Protection Act
o Halls NAIC CIPR Newsletter Recent Developments in the Captive Insurance Industry
Topics on tort law and insurance law with respect to its impact on the general insurance industry
are covered in a number of resources including:
o The Institutes Custom Publishing textbook, prepared for the SOA, Excerpts from Business
Law for Insurance Professionals (including chapters on Contract Law: Insurance
Applications, Tort Law and The International Legal Environment)
o SOA study note on Tort Issues for General Insurance Actuaries
o Klars Pepperdine Law Review article The Impact of U.S. Tort Law in Canada
o Whites Journal of Economic Perspectives Asbestos and the Future of Mass Torts
o A collection of articles summarizing important legal cases with respect to the US general
insurance industry (including Daubert v. Merrell Dow Pharmaceuticals, Inc., States v.
Lourdes Hospital, Campbell v. State Farm, Philip Morris USA v. Williams, Wyeth v. Levine,
Wal-Mart v. Dukes, Yan Fang Du v. Allstate Ins. Co., and Buss v. Superior Court)
Advanced Topics in General Insurance Exam
Stochastic reserving is covered in the following resources:
o Macks CAS Forum paper Measuring the Variability of Chain Ladder Reserve Estimates
o Venters CAS Proceedings paper Testing the Assumptions of Age-to-Age Factors
o Clarks CAS Forum paper LDF Curve Fitting and Stochastic Reserving: A Maximum
Likelihood Approach
Risk margins for unpaid claims is covered in the Institute of Actuaries of Australia paper A
Framework for Assessing Risk Margins, by Marshall, Collings, Hodson, and ODowd
Credibility models with parameters that shift over time is covered in the SOA Study Note
Credibility with Shifting Risk Parameters, by Klugman
Reinsurance pricing is covered in Clarks actuarial study note Basics of Reinsurance Pricing
Methodologies for determining an underwriting profit margin is covered in the following CAS
Proceedings papers:
o DArcy and Dyers Ratemaking: A Financial Economics Approach
o Mangos An Application of Game Theory: Property Catastrophe Risk Load

Enterprise Risk Management Exam


Topics on understanding, identifying and analyzing the risks faced by an entity are covered in a
number of resources including:
o Sweeting textbook Financial Enterprise and Risk Management (including chapters on
Definition of Risk and Risk Identification)
o Jorion textbook Value-at-Risk: The New Benchmark for Managing Financial Risk, (chapter
on Liquidity Risk)
o Andersen and Schroder textbook Strategic Risk Management Practice, (chapter on
Strategic Risk Analyses)
o AAA Practice Note Insurance Enterprise Risk Management Practices (pp. 4- 26)
o IAA Note ERM for Capital and Solvency Purposes in the Insurance Industry (pp. 938)
Topics on understanding and evaluating risk modeling and the aggregation of risks are covered in
a number of resources including:
o Sweeting textbook Financial Enterprise and Risk Management (including chapters on
Extreme Value Theory, Quantifying Particular Risks, and Unquantifiable Risks)
o Jorion textbook Value-at-Risk: The New Benchmark for Managing Financial Risk,
(including chapters on Computing VaR, Portfolio Risk: Analytical Methods, Forecasting
Risk Correlations and Monte Carlo Methods)
o Textbook Measurement and Modeling of Dependencies in Economic Capital (Chapter 4-5)
o Basel Committee Developments in Modelling Risk Aggregation (pp. 72 -89)
o SOA Study Note on Parameter Risk
o Milliman article Economic Capital-Practical Considerations
o AAA Practice Note Insurance Enterprise Risk Management Practices (pp. 4- 26)
o Study note on Model Validation Principles Applied to Risk and Capital Models in the
Insurance Industry
o Study note on Aggregation of Risks and Allocation of Capital (Sections 4-7)
o IAA Note Stress Testing and Scenario Analysis (pp. 1-6 and 14-17)
o Textbook Counterparty Credit Risk: The New Challenge for Global Financial Markets
(Chapter on Defining Counterparty Credit Risk)
o Klugman, Panjer and Wilmot textbook Loss Models Further Topics (Chapter on Copula
models)
o Babbel and Fabozzi textbook Investment Management for Insurers (Chapter on the Four
Faces of an Interest Model)
o JRMS Report Risk Appetite: Linkage with Strategic Planning
o JRMS Risk Management Article Modeling Tail Behavior with Extreme Value Theory
o SOA Monograph A New Approach to Managing Operational Risk (Chapter on
Measuring/Assessing Operational Risk)
o JRMS Risk Management Article Summary of Variance of the CTE Estimator
Topics on the use of metrics to measure risk are covered in a number of resources including:
o Sweeting textbook Financial Enterprise and Risk Management (including chapters on
Some Useful Statistics and Unquantifiable Risks)
o Jorion textbook Value-at-Risk: The New Benchmark for Managing Financial Risk,
(including chapters on Computing VaR, Portfolio Risk: Analytical Methods, Forecasting
Risk Correlations, Monte Carlo Methods, Liquidity Risk and Credit Risk Management)
o Study note Value-at-Risk: Evolution, Deficiencies, and Alternatives
o Meyers paper Coherent Measures of Risk An Exposition for the Lay Actuary
o IAA Note ERM for Capital and Solvency Purposes in the Insurance Industry (pp. 938)
o JRMS Risk Management Article Summary of Variance of the CTE Estimator
o ASB ASOP 23, Data Quality
Topics on the managing risks are covered in a number of resources including:
o Sweeting textbook Financial Enterprise and Risk Management (chapter on Responses to
Risk)
o Jorion textbook Value-at-Risk: The New Benchmark for Managing Financial Risk,
(including chapters on Portfolio Risk: Analytical Methods and Credit Risk Management)
o Andersen and Schroder textbook Strategic Risk Management Practice (chapter on
Strategic Risk Analyses)
o Study note Derivatives: Practice and Principles (Recommendations 9-24 & Section III)
o Study note Key Rate Durations: Measures of Interest Rate Risks
o Study note Revisiting the Role of Insurance Company ALM within a Risk Management
Framework
o Wehrhahn paper Introduction to Reinsurance
o PWC Article Creating an Understanding of Special Purpose Vehicles
o AAA Practice Note Insurance Enterprise Risk Management Practices
o Westover textbook Captives and the Management of Risk (Chapter 1)
o Textbook Counterparty Credit Risk: The New Challenge for Global Financial Markets
(chapter on Defining Counterparty Credit Risk)
o IAA Note ERM for Capital and Solvency Purposes in the Insurance Industry
o SOA Annual Meeting Session slides from Assumption Setting Best Practices
o SOA Monograph A New Approach to Managing Operational Risk (chapter on
Measuring/Assessing Operational Risk)
o JRMS Report Risk Appetite: Linkage with Strategic Planning
Topics on capital management are covered in a number of resources including:
o Textbook Measurement and Modelling of Dependencies in Economic Capital (Chapter 3)
o Milliman article Economic Capital-Practical Considerations
o Study note Revisiting the Role of Insurance Company ALM within a Risk Management
Framework
o Study note on Aggregation of Risks and Allocation of Capital (Sections 4-7)
o S&P Enterprise Risk Management Criteria
o Study note ORSA An International Requirement (Sections 3.1 and 4.1)
o Study note Risk Based CapitalGeneral Overview
o JRMS Report Risk Appetite: Linkage with Strategic Planning
o SOA Annual Meeting Session slides from Assumption Setting Best Practices
ERM topics for the General Insurance extension are covered in a number of resources including:
o S&P Enterprise Risk Management Criteria (Paragraphs 74-81)
o Study note P&C RAROC: A Catalyst for the Improved Capital Management in the Property
and Casualty Insurance Industry
o Study note Solvency II Reserving Risk and Risk Margins
o Study note Catastrophe Reinsurance Pricing
o Study note Natural Catastrophe Loss Modeling
o Study note Managing Interest Rate Risk: ALM, Franchise Value, and Strategy
o Study note Allocation of Capital in the Insurance Industry
o CAS Actuarial Review Article Were Going to Need a Bigger Boat, Part 1: Making Room
for Varied Views of ERM
o CAS Actuarial Review Article Riding the Waves of the Cycle
o SOA Article Evolution of Risk Management, Part 2: A Property/Casualty Perspective: The
Birth, Death and Resurrection of Dynamic Financial Analysis
o SOA Monograph ERM for Strategic Management - Status Report
o SOA Monograph Human Dynamics of Insurance Cycles and Implications for Insurers
o JRMS Report Regulatory Capital Standards for Property and Casualty Insurers under US,
Canadian and Proposed Solvency II (Standard) Formulas
o CIA Research paper Quantification of Variability in P&C Liabilities

Financial Economics Module


Bodie, Kane, and Marcus textbook Investments (including Student Solutions Manual to
Accompany Investments by Bodie, Kane and Marcus)
Several papers on asset-liability management are required
o Feldblum, S. Asset Liability Matching for Property/Casualty Insurers
o International Association of Insurance Supervisors. Standard on Asset-Liability
Management
o International Association of Insurance Supervisors. Issues Paper on Asset-Liability
Management
o Norris, P. Asset/Liability Management Strategies for Property & Casualty Companies
o Panning, W. Managing Interest Rate Risk: ALM, Franchise Value, and Strategy
Numerous optional readings including the following textbooks:
o Berk and Demarzo, Corporate Finance
o Brealey, Myers and Franklin, Principles of Corporate Finance
o Copeland, Weston and Kuldeep, Financial Theory and Corporate Policy
o Hull, Options, Futures and Other Derivatives
o McDonald, Derivatives Markets

Applications of Statistical Techniques Module


de Jong and Heller textbook Generalized Linear Models for Insurance Data
Additional readings (some optional, some required) include:
o Smyth, G., and B. Jorgensen. Fitting Tweedie's Compound Poisson Model to Insurance
Claims Data: Dispersion Modelling
o Yan, J., J. Guszcza, M. Flynn, and C.-S. P. Wu. Applications of the Offset in Property-
Casualty Predictive Modeling
o Klinker, F. Generalized Linear Mixed Models for Ratemaking: A Means of Introducing
Credibility into a Generalized Linear Model Setting
o CAS Working Party on Quantifying Variability in Reserve Estimates. The Analysis and
Estimation of Loss & ALAE Variability: A Summary Report
o England, P., and R. Verrall. Stochastic Claims Reserving in General Insurance
o General Insurance Reserving Oversight (GIRO) Working Party. Best Estimates and
Reserving Uncertainty
o Meyers, G., and P. Shi. The Retrospective Testing of Stochastic Loss Reserve Models
o Verrall, R. Obtaining Predictive Distributions for Reserves Which Incorporate Expert
Opinion

Enterprise Risk Management Module


There is no textbook for this module. There are numerous links to articles.