Chapter 30: Data Flashcards
Main uses of data
F - financial control I - investment R - risk management E - experience analyses S - statutory returns P - premium rating, A - accounting and administration C - determining contributions E - experience statistics
P - product costing,
I - management information
M - marketing
P - setting provisions
2 Main sources of data
- publicly available data
- internal data
Poor data can be due to… (2)
- poor management control of data recording or its verification processes
- poor design of the data systems
The actuary’s data quality assertions will regularly be checked by looking at (11)
(headings are artificial) RECONCILIATIONS - of member numbers - of benefits and premiums - of beneficial owner and custodian records where assets are owned by a 3rd party - movement data against accounts
CONSISTENCY
- of contribution and benefit levels with the accounts
- of average sum assured or premium compared with previous investigation
- of asset income data and accounts
- between start and end period shareholdings
OTHER
- validity of dates
- full deed audit for certain assets (eg property)
- records picked at random for spot checks.
Issues causing heterogeneous data in industry-wide data collection schemes
- companies operate in different geographical or socio-economic sections of the market.
- the policies sold by different companies are not identical
- sale methods are not identical
- companies will have different practices, eg underwriting, claim settlement
- the nature of the data stored by different companies will not always be the same
- the coding used for the risk factors may vary from organisation to organisation
4 Additional problems with large data collection schemes
- data may be less detailed / flexible
- data may be more out-of-date
- data quality may be poor
- not all organisations contribute
Assertions to be examined
- that a liability or asset exists on a given date
- that a liability is held or an asset is owned on a given date
- that when an event is recorded, the time of the event and the associated income or expenditure are allocated to the correct accounting period
- the data is complete (ie there are no unrecorded liabilities, assets or events)
- that the appropriate value of an asset or liability has been recorded.
4 Causes for the lack of ideal data
- Data have not been captured at a sufficiently detailed level.
- There may be insufficient data to provide a credible result.
- Poor systems
- Practically difficult / impossible to capture good data
Main aim of risk classification
To obtain homogeneous data.
The reduction of heterogeneity within the data for a group of risks makes the experience in each group more stable and characteristic of that group, and enables the data to be used more appropriately for projection purposes.
3 Primary Uses for Data
- Strategic decision making
- Day-to-day Running
- Monitoring
Uses for data: Day-to-day running
- Administration
- Investment
- Setting provisions (in financial statements)
- Marketing
Uses for data: Monitoring
- Premium rating & (benefit scheme) funding
- Internal management
- Experience statistics
- Financial Control
- Accounting (Financial Statements & Tax returns)
- Statutory returns
What do we mean by “good quality data”
- Complete
- Necessary level of detail
- Accurate
- Up-to-date
- Audit trail (crutial)
Checks on data:
Checks
• Detailed Audit • Reasonability Checks: ---- Averages ---- Impossible values ---- Outliers ---- Consistency over time ---- Check Asset data vs Liability data • Spot checks ---- Particularly on the "big ticket" items ---- random
Checks on data:
Valuations
Assets:
- At the start of the period
- Movements during the period
- At the end of the period
Liabilities:
- At the start of the period
- Movements during the period
- At the end of the period
Proposal and claim form requirements
A well designed proposal form will contain
….. unambiguous questions
to help ensure correct answers are collected from policyholders.
The information on both the proposal and claim forms should be easy to enter into the system.
The system must be able to link across proposal and claims records.
Proposal form contents:
Life insurers
The proposal form should capture the relevant underwriting information.
Proposal form contents:
General insurers
The proposal form should capture the relevant rating factors
