My Actuarial Working Life

When involving in system implementation (policy administration system) related work, I always encounter queries raised in administrating claim processes related to waiver of premium ("WOP") benefit. When WOP feature is triggered by a covered event (either death, TPD or critical illness), the benefit will be paid over long period (which may stretch for many years). This makes a systematic WOP claim process more important so that the inflow and outgo related to WOP benefit can be managed properly. What is WOP benefit? Briefly, when WOP feature is triggered by a covered event (either payor or insured), all future payments for premium after event date are "waived" - this doesn't mean the affected policy no longer receiving premiums. More accurately, although no payment is required for this policy, this policy still receives premiums - just the premiums come from different sources. This policy is expected to work as normal without any hiccup, for example, an inves...

"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...

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...

Hooray, I finally completed the Takaful Library! Working together with Ms. H, we finally setup the Takaful Library from scratch and created 32 “Products” (and another 19 “Same As” products). I am glad that the Valuation Team (headed by my ex-boss Mr. R) can now using a consolidated workspace to do the actuarial studies, especially asset share study and reserve & liabilities capital charges for new valuation basis and Risk-based Capital (RBC) submission. After around 4 months of hard work, finally I can really sit down and “document” this exercise. I will share the experiences I have in this article and several subsequent articles later – hopefully they can help to provide some ideas to you… The above flow chart summarizes the approach I used to complete the Takaful Library project for my Client: Approach Papers I started the project by preparing documentation (Excuse me, I think I heard someone just shouted “Oh no!!”…), which I generally called them as “approach papers” fo...

I had an hour chat with Ms. H & Mr. L on Prophet Modeling yesterday. Ms. H is my ex-staff when I was the leader for the Modeling Team, she is quite brilliant in helping me setting up the Prophet models (simplified) the Valuation Team currently uses; while Mr. L is my replacement. The objective of the short chat was to exchange some thoughts on how to proceed the work to model a comprehensive cash flow projection model for the Takaful business. Well, although I have partly did the projection model before I resigned from Actuarial Department, I suggested to Mr. L that he should start setting up the model from scratch – instead of continuing from my partially complete model or doing amendments from the Conventional Library. Well, doesn’t this consume more time? This sounds correct if we only have a quick thought, but if we really make a thorough consideration, actually setting up the model from scratch is easier and more efficient. Let’s talk about doing amendment from Conventional Li...