Chapter 13 Data

Question 1

General data considerations

Answer 1

• Data availability
• Making adjustments for credibility and relevance
• Projection to midpoint of insurance usage
• Group business

Question 2

Data availability and criteria

Answer 2

• Important component of premium charge is the risk premium should be as accurate as possible for period of cover.
• most appropriate statistics should be used, should be relevant & credible
• cost of obtaining data
• & suitability of format in which data is in should be considered as well.
• actuary will use judgement in calculating statistics,
• using these to project data in order to estimate for future claims

Question 3

Making adjustments for credibility & relevance

Answer 3

• adjust data to meet the requirement of exercise being performed.
• more accurate allowances can be made where insurer’s own experience is greater.

Question 4

Projection to midpoint of insurance usage

Answer 4

• Claim incidence rates will vary by age & calendar year.
• Claim termination rats will also vary by duration from claim inception.
• CI incidence rates should be analysed & projected by each claim cause then combined.
• PMI incidence rates and average claim costs should be analysed and projected for each benefit of treatment category separately.
• Rates should then be projected to midpoint of insurance usage.

Question 5

Group business

Answer 5

-Chapter 20 covers this

Question 6

Own data characteristics

Answer 6

• Most relevant source of data
• may not be credible, especially if data is broken into many risk cells.
• It may need to be supplemented with external data
• actuary may need to make adjustments to external data to make it appropriate.
• cost, format & reliability should not cause problems.
• for new insurer the actuary will rely on other sources of data not internal.

Question 7

Population data merits

Answer 7

• this will not be fully relevant to the insured lives or insurance products, eg claim definition.
• It should be very credible
• Disadvantages of population data
• questionable accuracy and reliability
• inappropriate format
• may be out-of-date

Question 8

Reinsurers’ data merits

Answer 8

• The reinsurer should make the data as relevant as possible, although further adjustments may be needed for company’s specific underwriting & claims management.
• Reinsurance premiums will be based on premiums calculated by insurer hence determine treaty profits.
• Credibility will vary but more credible than own data
• reinsurer will likely provide data in return for a share of business.

Question 9

Market data merit: Insured lives data

Answer 9

• this should be more relevant than population data as it is based on local experience of insured lives
• May not be relevant to individual insurers and by time it is published, may be out of date.
• it should be credible.
• draw back is remains market average doesnt relate to one insurer.

Question 10

Data obtained from returns to the insurance supervisor merits

Answer 10

• These are likely to be accurate
• may be hard to extract useful information
• more likely to be used for an overall check of other data sources.
• the data has national relevance to company concerned. However care should be exercised since policy conditions might differ.
• This data should be more credible than insurer’s own data but less credible than population data.

Question 11

Other sources of ata

Answer 11

• overseas data
• actuarial consultants
• rate table software
• trade magazines

Question 12

Overseas data merits

Answer 12

• may not be particularly relevant

- however may be credible

Question 13

Actuarial consultants data merits

Answer 13

• similar to reinsurers’ data

- however likely to have less of an interest in risk

Question 14

Rate table software data merits

Answer 14

• use to gather initial data

- or checking final premiums rates

Question 15

Trade magazines data merits

Answer 15

-may be useful for checking final results
-will lack detail breakdown.
-will not include claim statistics but only level of benefits offered
and premium rates charge by other companies.

Question 16

Data required for each of the products

Answer 16

Exposure + Incident info

CI

LTCI

PMI