Chapter 15 - Demographic Assumptions

Question 1

4 steps in determining demographic assumptions:

Answer 1

1. Collecting appropriate data
2. Grouping the data
3. Calculating the rates
4. Adjusting the rates

Question 2

Factors that might make future renewal experience different from the past, for PMI

Answer 2

1. Economic conditions
2. Availability of, or level of State HC benefits
3. Distribution channel
4. Sales method
5. Target market
6. Territory
7. Product design
8. Policy wording
9. Benefits provided
10. Underwriting practice
11. Claims handling practice
12. Price
13. Competitiveness
14. Standards of customer service

Question 3

Lapse rates are more important when: (4)

Answer 3

1. The occur early in the policy term, when a financial loss would be made
2. A surrender value is payable
3. The lapse is selective, leaving a worsening propensity to claim among those remaining
4. There is lapse and re-entry risk