Chapter 30: Data Flashcards
What are the main uses of policy and claims data?
- Administration
- Accounting
- Statutory returns
- Setting investment strategy
- Financial control
- Management information
- Risk Management
- Setting provisions
- Experience statistics and analyses
- Pricing
- Marketing
Ideally, all of these functions should be controlled through one integrated data system.
What are the main sources of data?
- published company accounts
- regulatory returns
- internal experience investigations
- industry data, including actuarial tables
- national statistics
- data from reinsurers
Why might data be of poor quality or quantity?
- Poor management control
- Poor design of data systems
How can good quality data from the proposal and claim forms be ensured?
- well-designed and unambiguous questions that are in the same order that they will be processed on the administration system.
- It is important that the result of any underwriting is captured;
- and for general insurance, that the rating factors can all be separately identified.
The policy data should be used to check the validity of the claims data and vice versa.
What are the data issues for employee benefit schemes?
- The actuary may not have full control over the data, and so validation is particularly important
- Additionally, the data might not be sufficiently detailed to provide all the information that is financially significant to the valuation
What are the sources of data that are useful in checking the current data from the scheme?
- Data from the previous valuation, for reconciliation with the current data
- Accounting data for checks on assets, benefit outgo and contribution income.
- A full listing of the assets held to check whether they are permitted.
What are the problems with using summarised data?
The reliability of the valuation will be reduced as full validation of the data is impossible.
Changes in the mix of the members may remain unidentified.
Summarised data is not useful for valuing individual options and guarantees.
Some countries have industry-wide data collection schemes.
What is this useful for?
Industry-wide data can be used
- to increase the credibility of a country’s own data, or
- for providing a comparison of a country’s own data against that of competitors.
Industry-wide data might not be directly comparable.
Why is this?
There will be differences in
- target markets
- geographical or socio-economic areas of operation
- policy conditions
- risk and rating factors used
- underwriting and claims settlement
- ways of storing data
In addition,
- industry data may be less detailed or flexible than internal data.
- It may be out of date,
- not everyone contributes,
- the quality may be dubious.
4 Categories of checks to be carried out on data
- Reconciliations
- Cross checks
- Reasonableness checks
- Spot checks
3 Reconciliation checks on data
Include:
- reconciling the total number of members or policies and changes in membership or policies using previous data and movement data
- reconciling the total benefit amounts and premiums and changes in them using previous data and movement data.
- reconciling shareholdings at the start and end of the period adjusted for sales and purchases and bonus issues.
4 Cross checks on data
- checking movement data against accounting data, e.g. benefit payments
- checking membership data against accounting data, e.g. contributions
- checking asset data against accounting data, e.g. investment return.
- checking asset ownership records against the custodian’s records
Reasonableness checks on data
- Checking the average sum assured or premium looks sensible for the class of business, and against previous data.
- Checking for unusual values or missing data.
Spot checks on data
- Checking individual members or policy records.
- Checking that individual assets or liabilities exist on a given date.
- Carrying out a full deed audit for certain assets, e.g. property title deeds
- Checking that the correct value for an asset or liability is being recorded.
Main aim of risk classification
To obtain homogeneous data
