My Actuarial Working Life

This morning when I went through parts of my actuarial study notes on modeling, I came across this statement: " The modeling process often has a demanding deadline and a temptation could arise to accept the results from the model without performing a rigorous validation process. It is imperative that sufficient time be allotted to validating the model and subsequently reconciling the model results to emerging results. " This statement has rightfully highlighted the importance of validating & reconciliation exercises during modeling process - in fact, this statement is also true for other actuarial works as well as system implementation. Theoretically, we know that we should allocate adequate amount of time & resources to check/validate the model/process we have built up and reconcile the results the model/process has produced. Unfortunately, in real life, not many of us do what the statement has suggested in practice. "We have to forego vigorous checking ...

After completing my Prophet training yesterday, I met someone from another department (i.e. not Actuarial Department) and had a short chat with him. During our conversation, we briefly touched on the work Actuarial is doing (more specifically Actuarial Department in an insurance company). Mr. L commented that Actuarial's work is too specific in their own technical area, and they do not see the business from wider angle compared to another department (well, this was considered a polite way to say "having less business sense..."). Actually I wasn't surprise to hear this comment, however I didn't agree with this perception. "Actuarial have involvements in many areas of an insurance company - based on my experience, I know Actuarial does involve in areas like finance, underwriting, claim, operations and ..." Although I don't agree with what Mr. L has commented, I do observe some of us who working in Actuarial fields limit ourselves to so-called ...

"Mr. P is now having some hard time dealing with policy data... Last time he just used the data which were already cleaned up and formatted by Mr. C. Anyway, this is good for him." Ms. L told me so during our coversation when we had lunch together yesterday. She is my ex actuarial colleague who I have known for ten years (and she is now a "mom-to-be"!) "Yup, this is definitely a good thing for him to learn. Now he can get to the real picture of policy admin system." I agreed with Ms. Lee. Mr. P is my ex-colleague as well, however he is a few years junior than us. "Actually almost all companies have some extents of system issues." "Yes, I agree. I think that most problems because the persons who setup system do not have enough knowledge on how the business should work." After dealing with several policy admin systems at different insurance/takaful companies, I find out that lack of business knowledge is the key reason causing m...

In my previous article, I share some tips on how to use Excel to write FoxPro SQL coding (" FoxPro Tips (1): Use Excel to Write Your Codes "); in this article, I will share another tip of using Excel to write coding - but this time is for writing formula in Excel spreadsheet itself! You may find out some tedious formula can actually be written in a very quick & simple way. Let me share with you real case study. One of the exercises I have completed with my client recently was checking Prophet model point files ("MPF") produced from a new tool - to find out if there are any differences from the existing MPF: STEP 1: Import MPF into Excel Figure 1: New MPF data (labeled as "data1") Figure 2: Existing MPF data (labeled as "data2") To compare new and existing MPF, import the MPF into Excel (note: MPF are in comma delimited format) and organize the data as per Figure 1 & 2 below.  If you examine "data1" sheet and ...

Figure 1 : File Layout for a Source Text File Do you ever think of using Excel or other spreadsheet application to help you to write your FoxPro program? Yes, when you need to write a set of tedious coding, you may find out Excel may be a great helper to you. For example, in order to convert a source text file into DBF format, I need to create a table structure based on the file layout of the text file (just like Figure 1). However, the problem is the text file consists of 200+ fields - I would definitely look stupid if I copy the field names & field properties one-by-one into the SQL coding. Your guess is right, I completed the relevant coding ( CREATE TABLE (Field1 C(1),Field2 C(8),...) ) within a few minutes by using Excel. Let me share with you how I did the coding: STEP 1:   Copy the file layout to Excel Figure 2: Copy file layout to Excel I copied field name, field type and field width from file layout Word document and pasted value into Excel. Of cou...

"Do you agree that spreadsheets cannot be separated from actuarial life?" Yes, I totally agree without any doubt - almost all actuarial exercises that I know involve spreadsheets, especially MS Excel. I even heard a actuarial joke before teasing actuaries: "An actuary is a person who creates complicated spreadsheet". Tips (1): Simple Rules for Good Spreadsheet Templates Well, actually I don't quite agree with this actuarial joke. I admit that I have few spreadsheet templates that are complicated, but many spreadsheet templates I created before are actually pretty simple (despite the number sheets). Why should we create a complicated spreadsheet template if we can use a simpler way to do our work? I used to advise my ex-team members previously to follow some simple rules when creating their spreadsheet templates: Avoid advanced Excel formulas if possible - you can do most of your jobs using common Excel formulas (such as SUM, SUMIF, SUMPRODUCT, COUNTIF, VLO...

As I have mentioned in my previous article about spreadsheet tips (" Spreadsheet Tips (1): More Flexible MOP Template "), you don't need to be an Excel expert or having a blackbelt in VBA in using the tips I have shared. In fact, the more "sophisticated" your spreadsheet is, the higher possibility your spreadsheet will drive your life into misery. In this article, I will share some simple rules in formatting your spreadsheet and structuring your spreadsheets. Oops, am I refraining you from becoming Picasso or Van Gogh in your office? Tip (1): Apply Standard Rules of Formatting One of the best ways to make your spreadsheets more efficient is to apply standard formatting rules when you setup a spreadsheet template. Why? By having standard formatting rules, you don't need to spend time to figure out which colors / border style / font face & size will make your spreadsheet nicer. Also, you don't need to have headache anymore when you need to combine...

When I worked with composite insurance companies (i.e. doing both life insurance and general insurance) some years ago, I involved in analyzing claim experience for each product line and calculating IBNR (Incurred but not reported) reserves. Every time I looked at the terrible loss ratio of “Motor (ACT)” and “Motor (Others)” classes, I would pray for the detariff of motor insurance premium rates coming as soon as possible. I’m glad to hear Bank Negara Malaysia’s (BNM) announcement via its press release on 6 January 2012, revealing the New Motor Cover Framework. According to the press release, the gradual revision in the Motor Tariff premium rates will be implemented effective from 16 January 2012, over a period of four years (2012 to 2015). The Framework will pave the way for detariffing of the motor insurance premiums in 2016, in which premium rates will be further differentiated in accordance to the risk profile of individual vehicles and fairer to vehicle owners as those with good...