Framework 3 Flashcards
Chapter 18 - Modelling
1 Definition of a model
2 Balanced model
3 Model vs formula
4 Obtaining a model and decision process (FENCED)
5 Operational issues when designing a model (SCARCER FILES)
6 Factors to consider in setting a time period for a model
7 Deterministic vs stochastic models
8 Dynamic model
9 Steps in a deterministic model
10 Additional steps in a stochastic model
11 Model points
12 Instances where model points are inappropriate
13 Discount rate in a model
14 Assessing statistical risk
15 Using a model to set premiums
16 Model points don’t all need to be profitable
17 Unmarketable premiums reconsideration
18 Factor in setting premiums (besides profitability and marketability)
19 Assessing capital requirements and return on capital
19 Using models for risk management
20 Suitability of stochastic models for modelling guarantees
21 Variability is not completed modelled in a stochastic model
22 Model error and parameter error
23 Allowing for a risk in a model
Chapter 19 - Data
1 Define ‘personal data’
2 Data Protection Act
3 Sensitive personal data
4 Big data
5 Data governance
6 Risks of not having adequate data governance procedures
7 Key risks when using data
8 Algorithmic trading
9 Principle of using data
10 Sources of data (TRAINERS) *
11 Causes of poor data quality and quantity
12 Ways of ensuring good quality data from the proposal and claims form
13 Importance of proposal form at time of claim
14 Importance of retaining past policy and claim records
15 Problems with data for employee benefit schemes
16 Sources of data for a valuation of a benefit scheme
17 Reconciliation checks on data
18 Cross checks on data
19 Reasonableness checks
20 Spot checks
21 Problems with using summarised data
22 Industry-wide collection schemes in the uk
23 Reasons why industry data is not directly comparable
24 Other problems with industry data
25 Risk classification
* Uses of data
Chapter 20 - Setting assumptions
1 Important considerations when setting assumptions (LUNCH)
2 Using historical data for setting economic assumptions
3 Using current data and forecasts for setting assumptions
4 Possibility of past data being irrelevant to the future
5 Changes in social, economic and fiscal conditions affecting assumptions
6 Changes in the balance of homogenous groups affecting assumptions
7 Considerations in using data from standard mortality tables
8 Accuracy and prudence when setting assumptions
9 An implicit assumption in a pension scheme
10 Ways to build in margins for risk
11 Profit criteria
12 Contract design features that increase the risks
Chapter 21 - Mortality and morbidity
1 The use of risk classification in life insurance
2 Limitations of risk classification in life insurance
3 How life insurance companies deal with the limitations of risk classification
4 Why it is necessary to have different mortality tables for different classes of lives
5 Six factors other than age and gender that directly affect mortality and morbidity rates
6 The effects of occupation on mortality and morbidity
7 The effects of nutrition on mortality and morbidity
8 The effects of housing on mortality and morbidity
9 The effects of climate and geographical mortality and morbidity
10 The effects of education on mortality and morbidity
11 The effects of genetics on mortality and morbidity
12 Describe term selection
13 Five types of selection (STATiC)
14 Temporary initial selection
15 Class selection
16 Time selection
17 Adverse selection
18 Spurious selection
19 Mortality convergence
20 Decrements having a selective effect
Chapter 22 - Expenses
1 Types of expenses 2 Expenses fixed in short term but variable in long term 3 Benefit scheme vs insurance expenses 4 Process of allocating expenses 5 Indirect expense allocation 6 Describing the function of expenses 7 Ways of loading premiums for expenses
Chapter 23 - Contract design
1 Factors to consider when designing a contract (AMPLE DIRECT FACTORS)
2 Parties involved in contract design (ALPACAS)
3 Factors influencing the needs of the provider and of the providers customers
4 Catering for different risk appetites
5 Regulatory environment influence*
6 Meaning of profitability in contract design**
7 Features increasing marketability
8 Types of options
9 Types of guarantees
10 Principle when setting discontinuance terms
11 Definition of discontinuance terms
12 Deciding on contract on which to offer discontinuance terms
13 Factors to consider when determining discontinuance terms
14 Policyholders’ expectations on discontinuance
15 Factors to consider when an individual leaves a benefit scheme
16 Define new business strain
17 Ways to reduce new business strain
18 Methods of financing benefits
19 Administrative considerations in relation to contract design
20 Items covered by expense charges of an insurance company (COST RAID)
21 Cross-subsidies
22 Conflicts between contract design factors
* Aims and outcomes of treating customers fairly (TCF)
** Variables that might impinge on profitability (CEWIN)
Chapter 24 - Pricing and financing strategies
1 Cost vs price of benefits
2 Factors to consider in calculating the cost of benefits (besides value of benefits, expenses and profit)
3 Cash flows in respect of provisions and solvency capital requirements
4 Impact of a high solvency capital requirement on profits
5 Reasons for difference between price and cost of an insurance contract
6 Ways of financing pension scheme benefits
7 Reasons for actual contribution rate differing from the calculated theoretical cost of benefits
