CASTF Predictive Models Flashcards
What are the potential benefits of using predictive analytics in insurance? (REL)
-Reveals insights into insurance costs
-Encourages better risk management.
-Lowers many consumer costs
REL
What challenges do state insurance regulators face with predictive models?
many lack the necessary tools to effectively review rapidly evolving predictive models
What are the 2 main responsibilities given to the Casualty Actuarial and Statistical (C) Task Force?
draft and propose changes to the Product Filing Review Handbook
provide state guidance for rate filings based on predictive models
What is the purpose of the guidance provided in the white paper?
enhance uniformity in regulatory processes while considering state-specific insurance needs
What is the purpose of regulatory best practices for predictive models? (SIP)
Support parameter valuation
Improve model understanding
Provide a baseline for state regulators
SIP
Do regulatory best practices create standards for filings with predictive models?
No!! (But they help identify model elements and improve rating plans for consumers.)
How do regulatory best practices help state insurance regulators and the industry?
guide regulators
identify key model elements
facilitate resource sharing
improve review quality
aid in training
How do regulatory best practices benefit state insurance marketplaces?
regulatory best practices enhance market speed and competitiveness by improving review processes
How do regulatory best practices assist new insurance regulators?
regulatory best practices provide training and help identify needed resources for model reviews
to understand if a predictive model is cost-based
to understand if the predictive model is compliant with state law
to understand how the model improves a company’s rating plan
Check that the rating factors have these characteristics.
produce fair rates
not cause excessive premium disruptions
comply with state practices
Check the following items regarding the data and the model.
how the model was built
accuracy of input data
adjustments to raw data
update frequency of risk characteristics
Check interaction of the model with the rating plan.
must understand input characteristics of model
must understand integration of model with rating plan
must understand interaction of model with non-modeled variables
Check for desired characteristics regarding the insurance marketplace.
enable competition and innovation
protect model confidentiality
allow timely reviews for speed to market
