Analysis of Surplus: Decrements

[scarlets]

Does anyone know of any established UK Life Insurance company who has Unit Linked Pensions, who with regards to decrements :-

(a) does not adequately collect data with regards to whether these policyholders died or withdrew

(b) has an actuarial department which produces an analysis of surplus without separating deaths and withdrawals but lumps them together as 'decrements'

I'm not asking for names but I cannot think of any UK Life Insurance company with an actuarial department that behaves in this manner.

 

[Mark Willder]

Does anyone know of any established UK Life Insurance company who has Unit Linked Pensions, who with regards to decrements :-

(a) does not adequately collect data with regards to whether these policyholders died or withdrew

(b) has an actuarial department which produces an analysis of surplus without separating deaths and withdrawals but lumps them together as 'decrements'

This is the situation described in Question 1 part (ii) of the April 2012 exam.

It may be surprising that a company lacks the breakdown of data in this way (especially if you work in a large company with a modern valuation system). However, it's quite likely that smaller companies with legacy systems do lack this data (the insurer will have recorded it somewhere, but the actuarial systems may not have access to it).

For example, when I worked in the Valuation department we were using a data system that had a limited number of fields. It had been designed to have enough fields for the business we had been selling. However, as products and data needs changed, we found that we couldn't record everything we'd ideally want to and had to decide what was the most important.

The solution sets out good reasons why the lack of this data is not really a big issue (eg deaths are relatively few and the benefits are likely to be similar to withdrawal benefits anyway). So it may not be worth the effort of investing in new systems to derive this extra information.

Best wishes

Mark

 

[scarlets]

As there are separate admin processes for processing deaths or withdrawals then companies big and small would have this basic data recorded. Even the most basic legacy systems I've seen would have this information.

And I'm yet to see any analysis of surplus report produced by actuaries that doesn't separate deaths and withdrawals.

Bogus exam question detached from reality. Very unfair.

 

[scarlets]

Shouldn't Acted do the right thing and tell the Examiners the question was very unfair? As it appears that people who have stuck by commercial reality have not gained credit for pointing out how bogus the scenario described is for long-established UK insurance companies. Seems only those who played along with the unreal situation posed have gained credit. That doesn't make it look good who they let qualify.

 

[mugono]

The constant whining isn't likely to get you anywhere .

There will be many unusual situations that we all will face throughout our careers and what the profession is keen on is for actuaries to be able to think intelligently about the most practical way to proceed.

 

[scarlets]

I'm concerned about what's right, fair, legitimate & intellectually consistent. I don't sell those things out for personal advantage. Clearly some do.

 

[scarlets]

The constant whining isn't likely to get you anywhere .

There will be many unusual situations that we all will face throughout our careers and what the profession is keen on is for actuaries to be able to think intelligently about the most practical way to proceed.

Which in this case would be... get the data. Not make up a load of waffle. Seems only the latter has gained credit in this exam. Shameful.