Dynamic Financial Analysis in the Insurance Industry

Abstract

Although dynamic financial analysis (DFA) has gradually gained attention over the recent years, knowledge is scant about the practices in the insurance industry. The objective of this paper is to provide insights into the practices. The investigation is conducted via a field study in five UK insurance companies. An example is given to illustrate how DFA works in general. The results highlight key matters that actuaries emphasise when carrying out dynamic financial analysis. This paper sets out important implications that insurance regulators and the actuarial profession can take into account as they refine their supervisory and regulatory regime.