Change in valuation model/basis changes

Question 1

When deciding on the valuation model and assumptions, what are the main factors of consideration?

Answer 1

The valuation model and assumptions should be consistent with:

1. DATA - the members interpretation of the data available at the valuation date
2. PURPOSE - and the purpose of the valuation

Question 2

What are the consideration for the current valuation when using a prior valuation as a starting point?

Answer 2

1. DATA - Any new data that has emerged between valuations in the context of the previous valuation method and assumptions
2. The outcomes of any AvE analysis

Question 3

What are the key external factors to consider when deciding on the valuation basis? (MR PESU)

Answer 3

1. M - changes to the Mix of Business
2. R - changes in Reinsurance arrangements
3. P - changes in the Processing of Claims or premiums
4. E - changes in Economic and legal environments
5. S - identified Systems issues
6. U - changes in Underwriting