(3) Insurance Data
- Relevant date for recording written exposures/premiums on a CY basis is the later of the transaction processed date or the policy effective date (accounting principles).
- When there is a valuation date, then the remaining time of the calendar year won’t be considered (which is after the valuation date)
- In “Starting Unearned Premium” and “Ending Unearned Premium”, the starting and ending refer to the starting and ending of the Calendar Year (or the valuation date, whichever comes first)
- ALWAYS check the definition for the exposure.
- In-force metrics can be misleading (don’t tell about the scale of the policy portfolio)
- Pro-rata earning refers to “proportionate earning” (assumption that the policy is earned uniformly)
- Mid-term cancellations doesn’t mean, only in the middle of the term, but at anytime within the policy period
- Negative premium and exposures are associated with cancellations
- The total written premium will equal the total earned premium in policy year aggregation if expired or cancelled.
- If there is a mid-term change in the policy. We recalculate the premium by performing “on” and “off” transactions. This transaction just changes the old unearned premium (if there was no change) to the new unearned premium (had the change taken place before the policy was bought)
- Split policies into sub-groups when the earning pattern changes.
- Alternate way of showing your work
| Pol E & F |
|---|
| =0.5 + 0.5 |
(5) Claims Data
- Losses, Indemnity and Claims are the same
- LAE = ALAE (claims-adjuster for a particular claim) + ULAE (claims-adjuster salaries) = DCC (lawyers etc) + A&O. NAIC introduced this kind of split. To see how internal and external legal teams, were spending compared to each other.
- Transaction refers to the types of records in the database, which can arise due to different events (e.g. claims closed, re-opened, policy bought etc)
- Case reserves (which is aggregate-level) set by actuaries don’t appear in the claims database (which is transactional-level, so it doesn’t make sense to include them here)
- “AY 2020 as of 12 months” refers to the time period: from first day of the year 2020 to end of the year i.e., 1/1/2020 to 12/31/2020. Its a convention.
- Starting case reserve for AY, RY or PY is 0.
- Difference between “incurred losses” and “case incurred losses”.
bored start again from A.5.2