APN401: Glossary Flashcards
additional unexpired risk reserve
The amount set aside in addition to unearned premiums with respect to risks to be borne by the insurer after the end of the reporting period.
cash-back bonus
A benefit provided for in a policy document that entitles a policyholder to a predetermined benefit on the expiry of a specified period and under specified circumstances.
central estimate
When considering an estimate, the central estimate is taken to be an estimate that neither overstates nor understates the expected outcome. In other words, the results should be as likely to exceed the best estimate as it is to below the best estimate. As a result, it can be considered in a statistical sense as the median of the distribution.
claims administration expenses
The expected expenses relating to claims and policy maintenance in future.
claims handling expenses
Expenses associated with the recording and settlement of claims.
closed portfolio
When no new business may be added to a portfolio.
credible data
When data is worthy of confidence due to its applicability, validity or volume.
discounted mean term of liabilities
The weighted average term of liabilities, where the weights used are the present values of cashflows associated with each term.
diversification benefit
When combining classes of business, diversification benefits arise since it is unlikely that worst-case outcomes for each risk will occur at precisely the same time.
independent variation
Independent variation operates at the individual claim level. By definition, independent variation is uncorrelated and always gives rise to a diversification benefit.
long tailed business
Insurance business whose uncertainty about the amount and timing of claims payments typically takes more than one year to resolve.
materiality criteria
The methods, procedures or rules used to assess materiality.
member of the Actuarial Society of South Africa
Includes student, associate and fellow members of the Actuarial Society of South Africa.
Prescribed method
The rules, regulations, methods, procedures and calculations applicable to insurers when demonstrating solvency to the Financial Services Board.
probability distribution of liability
The distribution or spread of calculated liability amounts, together with their associated likelihood of occurrence.
recoveries
The expected amounts to be recovered by an insurer in respect of particular claims. A distinction can be made between reinsurance recoveries and non-reinsurance recoveries (salvage, subrogation, sharing agreements, etc).
reporting date
A point in time at which the insurer reports on its financial position.
risk
The uncertainty of future outcomes in relation to that expected. In particular, an increased uncertainty is interpreted to imply more risk.
run-off
When an insurer will write no new business, but continue to operate with underwritten insurance contracts until the end of the existing policies’ term.
run-off expenses
All expected expenses likely to be incurred in running off the portfolio.
sensitivity analyses
Assessing the change in result when varying the inputs to a model or calculation.
standard inflation
Standard inflation is inflation measured by a published index, where a link between such inflation and claim payments is believed to be present.
superimposed inflation
Superimposed inflation is the difference between total claim escalation and standard inflation.
systemic uncertainty
A correlated uncertainty where the degree of correlation varies between business classes. Some sources of systemic uncertainty are only relevant to a single class, but most affect more than one class.
technical provisions
The amount set aside to meet all liabilities arising out of insurance contracts, including claims provision (whether reported or not), provision for unearned premiums and provision for unexpired risks.
underlying probability distribution
The distribution or spread of outcomes for a random variable.
unexpired risks
Risks underwritten by the insurer for which coverage extends beyond the valuation date.
valuation date
A point in time at which an actuarial valuation is performed. The valuation date is usually the same as the reporting date.
valuation model
All the methods, procedures and calculations used in an actuarial valuation.
valuation unit
A valuation unit is a line of business, a part of a line of business, a group of lines of business or a group of parts of lines of business, which is treated as a single entity for the purposes of the actuarial valuation.
wind-up
When insurer intends ceasing all business activities and eventually returning its licence.
