Other questions Flashcards
List 15 external environment considerations
- C - CORPORATE governance
- R - REGULATIONS & legislation
- E - ENIVONMENTAL issues
- A - ACCOUNTING standards
- T - TAX
- E - ECONOMIC outlook (interest, inflation, forex)
- G - corporate GOVERNANCE
- R - risk management REQUIREMENTS
- E - EXPERIENCE from overseas (international practice)
- A - solvency & capital ADEQUACY
- T - demographic TRENDS
- L - LIFESTYLE considerations
- I - INSTITUTIONAL structures (mutual vs. proprietary)
- S - changing cultural and SOCIAL trends
- T - TECHNOLOGICAL changes (online banking / stock exchges)
- S - STATE benefits
Data sources for mortality assumptions
- National/industry/standard tables
*
Steps involved to claim insurance loss
- Report claim to insurance company and provide personal/policy details
- Receive report, information from appropriate investigating authority (e.g. policy, fire service)
- Initial description of claim to insurance company
- Complete claim form, including items claimed for and amount claimed
- Explain any immediate needs
- Obtain evidence of costs incurred (e.g. repairs, rebuilding, etc.)
- Co-operate with insurer’s claim process and required timelines
- Allow insurer access, information to assess the claim
- Decide whether or not to accept the initial offer from the insurance company
- Negotiate or take legal advice/action to improve terms of the offer
Implementation of a new model - checky
- General
- Keep a watching brief on milestones
- Monitor progress updates during implementation
- Consider need for peer review
- Data specific
- Ensure that data used in the new model is accurate and complete
- Ensure that data can be reconciled to old data
- Model specific
- Ensure that calculation method is accurate
- Ensure that calculations can be reconciled to old system
- Parallel run
- Stress / sensitivity tests
- Sign-off
Employers’ liability covers (examples)
- Injury or accident to employees at work (e.g. machinery related)
- Claims related to faulty equipment
- Claims related to workloads (e.g. too excessive or stressful)
- Claims related to dangerous practices (e.g. lack of protective clothing, drivers sent to dangerous areas, etc.)
Repo agreement
Repo is a sale and repurchase agreement. It involves the sale of securities (usually government debt) by money market dealers to the central bank, tied to an agreement that the dealers will buy back the securities at a later date.
The action of the sale of the securities to the central bank leads to more cash being available in the markets and therefore drives down interest rates temporarily.
Conflicts of interests - how to deal with
- Avoidance of the conflict (e.g. decline to advise one of the parties)
- Chinese walls established to ring fence people and data
- Disclosure of the conflict to both parties
- Keeping detailed records of work assignments
- Notifying the regulators if the actuary believes that his client is not treating customers fairly
Types of advice
- Indicative advice (an opinion)
- Factual advice (based on research of facts)
- Recommendations (involving research, modelling, consideration of alternatives)
Costs of regulation
- Direct costs
- Administering the regulation
- Compliance for the regulated firms
- Indirect costs
- Alteration in the behavior of consumers, who may be given a false sense of security and reduced sense of responsibility for their own actions
- Undermining of the sense of professional responsibility amongst intermediaries and advisors
- Reduction in consumer protection mechanisms developed by the market itself
- Reduced product innovation
- Reduced competition
Classification of financial needs
- Logical vs. emotional needds
- Logical needs:
- Maintaining current lifestyle
- protection
- accumulation for a purpose
- accumulation for a purpose as yet unknown
- Logical needs:
- Current vs. future needs
Define the term “risk budgeting”
The process of establishing how much risk should be taken and where it is most efficient to take risks in order to maximize returns
