Vaughan discussed DFA-type tools now being utilized in Australia, Switzerland and Canada. She cited the work of the Basel Committee, a group of international banking regulators in Switzerland, which has recently developed a Proposed Capital Adequacy Framework for use as an internal capital assessment process. This framework would include minimum capital requirements, would involve a supervisory review process and would rely on market discipline to support regulatory objectives. John Purple, chief actuary and director of financial regulation, Connecticut Department of Insurance, said that regulators are concerned with accuracy and validity of DFA, stating that the model parameters and the quality of the inputs greatly determines the validity of the outputs.
Confidentiality is another issue.
The right knowledge and expertise is critical, too, according to Purple. Chester J. Sczcepanski, chief actuary, Pennsylvania Department of Insurance, talked about risk assessment experiences in Pennsylvania. Victoria S. Lusk, an actuary in the Colorado Division of Insurance, described Colorado's use of DFA through its Surplus Sufficiency Report, which has been required since 1992. The Report is intended as a means to determine what level of surplus is sufficient for current and future writings of a company and, therefore, whether the admission of a company to Colorado would have adverse effect on the company, their policyholders or the regulators. Inc. The Casualty Actuarial Society is an organization dedicated to the advancement of the body of knowledge of actuarial science applied to property, casualty and similar risk exposures.