My Actuarial Working Life

When I worked with one of my previous client, I came across " Claim Contingency Reserve " (CCR) in their operation model. According to "Takaful and Retakaful - Principles and Practices" written by Tobias Frenz, CCR (also known as Special Reserves or Equalisation Reserves in some markets) acts as a buffer against an adverse or volatile claims experience. My client and I have a few discussions on CCR, especially on whether it is necessary to establish CCR in the participant risk funds. Normally, CCR is funded by surplus arising during the year and setup as a % of tabarru' or technical provision (This reminded me of the old days when I calculated solvency margin using 4% of reserves, ...). It was a a challenge to determine an appropriate % to be used and the approach to releasing CCR over time. Well, there is no prescribed % or approach available. 15% or 10%, which is better? Should we release over 3 years or 5 years? Should we release linearly or staggered (like

Note: Please note that the following discussion is only for movement of policy (MOP) of individual life/family takaful products only. Among the three statistical reporting forms (L6, L7 & L8 for life insurers; FT5, FT6, FT7 for takaful operators), the termination / alteration statistics are considered as the most complicated. As all three forms need to be reconciled (please refer to the above diagram), many people have no choice to put the differences that cannot be reconciled as "Others" (another popular word to be used is "balancing item"). In fact, it is not complicated if you follow the correct approach to do these termination / alteration statistics. If you re-arrange the formulas in the above diagram, you can easily see that actually these statistics intend to explain the changes/movements occur previous month in force policies and new business incepted in current month, by comparing to the current month in force policies. So, what is the best way

Note: Please note that the following discussion is only for movement of policy (MOP) of individual life/family takaful products only. Compared to new business statistics, in force statistics are much simpler - basically, what we need to report are the policies as at end of particular period (month-end / quarter-end / year-end) which are considered as "in force" (i.e. the coverage is still valid). Depending on the policy admin system we use, we can identify the in force policies by referring to their policy statuses. In one of the system I used previously, the "in force" business are those policies having the following policy statuses: In Force : Normal premium paying policies. Paid up : Applicable to the limited payment products only; policies which all required premiums have been paid. Reduced Paid Up (RPU) : The policyholders decide not to continue paying the remaining premiums (or by other scenarios defined in the contracts) and covert the policies to

Note: Please note that the following discussion is only for movement of policy (MOP) of individual life/family takaful products only. When we create a new entry in a policy admin system, normally we will create a " proposal " - so that the underwriters can perform necessary assessments and decide the proposed life can be accepted or request for additional information (such as medical checkup). After all the underwriting requirements have been fulfilled (and of course we have received "adequate" premiums), the proposal will be converted to an " in force " policy - and our agents will be happily informed their clients: "Congratulation! You are now covered by Company ABC!" In simple words, our " new business " statistics are used to report the proposals that have been converted to in force policies in a particular period (month/quarter/year). How frequent we should prepare the statistics? I would recommend to prepare new business st

If someone asks me: "Who should be the most appropriate person in charge in doing movement of policy (MOP) reporting - Actuarial or Data Warehouse (or IT Department)?" After some hesitation, I shrug my shoulders: "Frankly, I'm sorry that I don't know..." Ideally, MOP reporting is basically summarizing & categorizing the data available in the policy admin system. If the system data are "clean" (what a luxurious wish), we can just apply some rules to segregate the available policies into "new business", "termination/alteration" and "in force" - just like what we do using Excel, FoxPro or DCS (Data Conversion System). Furthermore, the rules are actually easily understood by even non-actuarial colleagues. Now, it sounds like it is a bit too expensive to as Actuarial Department to do MOP reporting. However, in reality, the data in the policy admin system in many companies are not clean - especially those with group