Chapter0-Introduction

Question 1

Framework

Answer 1

1 Actuarial Control Cycle diagram 
2 ACTUARIAL control cycle
3 Specifying the problem
4 Developing the solution
5 Monitoring the experience
6 Applications
7 Risk Management

Question 2

Specifying the problem

Answer 2

State the problem clearly, taking all parties into account

Analyse the risks involved for each party

Consider ways to minimise the risks

Think of how to create solutions to the problem that transfer risk from one party to another

Question 3

Developing the solution (10)

Answer 3

Examine the major actuarial models currently in use

Select the most appropriate model to use, or constructing a new model

Consider and selecting the assumptions to be used in the model

Understand the sensitivity of the results to the assumptions

Interpret the results of the modelling process

Consider the implications of the results on the overall problem and for each party

Determine a proposed solution to the problem

Consider alternative solutions and their effects on the problem

Formalise a proposal

Communicate the proposed solution (and alternatives) to the parties responsible for taking the decision

Question 4

Monitoring the experience

Answer 4

Analyse actual experience against expected experience every period

Identify causes of departure from expected experience and determine whether each source is one-off or recurring

Feed back into the specifying the problem and developing the solution stages of the actuarial control cycle

Making sure the model is ‘dynamic’ (ie assumptions are consistent) and reflects current experience

The monitoring of new contracts or new elements of a contract should occur more frequently.