My Actuarial Working Life

If you are working in the actuarial department of an insurance company, it may not be uncommon to you involving in various testing exercises, which are known as User Acceptance Testing ("UAT") in general. Some of us may think that UAT is only applicable to the policy administration system implementation project (Oops... Do I remind on the non-stop follow-ups from your Project Manager?), but in fact UAT is also needed for the programs, spreadsheet templates or actuarial model we use to perform various actuarial studies - whether they are developed internally or by external consultant. It is particularly important for those tools which we are going to use to perform regular studies. In my view, there is no one right answer for the approach to be used in performing UAT on program / spreadsheet / model - most importantly, the approach that you adopt should allow the required testing to be carried out in a structured manner, and it should not create too much "processes...

SCENARIO: Mr. A, the head of valuation team of Company X, was struggling on how to manage his Prophet workspaces. Due to various constraints (time constraints, resource constraints, ...) in the past, his team ended up using multiple Prophet workspaces in performing valuation exercises - which incurred extra time & efforts in completing required studies. To make the matter worse, some workspaces were actually having the same products (well, the oldest workspace was used to calculate statutory reserves and the latest workspace was used to calculate IFRS reserves...) - his team needed to prepare different sets of model point files for these workspaces because the variables used to read model model point files having different names! The Chief Actuary was unhappy with this inefficiency in managing workspaces. He requested Mr. A to work out a way to consolidate the workspaces into one workspace, or at least lesser workspaces. The problem is, the Prophet Manager couldn't allocate ...

Finally it comes the time to prepare for actuarial valuation work for new financial year 2013. I think it is the correct time for me to share my proposal to one of my clients, Actuarial Department of Company A ,  in order to improve how they can manage their valuation Prophet workspaces. Existing Approach Apart from monthly valuation (i.e. computing statutory reserves), Company A performed various valuation exercises, such as market-consistent embedded value ("MCEV"), on regular basis. Currently, they use a centralized Prophet valuation workspaces for all sorts of valuation exercises, which designated run numbers are assigned to different types of exercises. In order to segregate runs for different valuation months, the Prophet workspace is duplicated every month (including the relevant tables) into a new folder. Of course, all workspaces are saved in a designated drive in the server. Although there are some advantages using this approach, I do share with Company A...

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 ...