Doubts from Chapter 27

Discussion in 'SP2' started by Kamal Sardana, Jul 31, 2021.

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  1. Kamal Sardana

    Kamal Sardana Active Member

    Hello Tutor :)

    Q.1 = Can you explain me this line: It is important for the movements data to be independent of (i.e. separately generated from) the in-force data.

    Although core reading tried to explain it but still am not getting it. Here is what core reading said:

    If the movements data were calculated as a function of the in-force data, eg: [movements off] = [in force at start] + [new business] – [in force at end] then nothing is being checked at all. A company with good data validating systems will have all items recorded as they occur, with records of movements on and off kept separately from, and in addition to, the current in-force record. At the same time, the actual movements on and off will be input to the current in-force record, which will therefore be subject to continual updating over the year. The reconciliation check will then pick up discrepancies and hopefully help identify the errors involved.
     
    Kamal Sardana, Jul 31, 2021
    #1
  2. Varsha Agarwal

    Varsha Agarwal Member

    Hi Kamal,
    I would like to share my understanding on same-
    Movement data here implies all the data changing their status from one valuation date to another.
    It is very general to know that Beginning+ change must equal ending. And this should not be purpose of actuarial checks.
    Purpose of reconciliation check must be to analyze all status movement from Beg to End, to understand where movements were justified according to terms and conditions of individual policies.

    For example, we must be able to reconcile our data from All status to All status, where few policies will be justified as New business, few as AFI/CFI, few must be lapsed, surrender, deaths which should be removed from IF in year end (if IF at beg). In this way all status must have defined justification for addition and subtraction.
    So in this way movement must depend on validating entire data records, where if force records could be used as one of means in the data checking process.

    Hope this helps, our tutors can explain better. :)
     
    Varsha Agarwal, Jul 31, 2021
    #2
  3. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi Kamal

    Checking that the end year numbers equal the start numbers plus the ons less the offs is a very simple check just to make sure that no data has gone missing in the valuation data. There's no point using the valuation data to do this as this is what we are checking - so if the valuation data has missed some new business say, then we won't spot it by doing this check, ie the ons will be too small but so will the end value.

    So we must use independent data to do this. Lots of oher systems will have recorded the ons and offs (eg accounts, new business processing, claim processing) and so we can use this independent data to verify that our valuation data is indeed correct.

    Best wishes

    Mark
     
    Mark Willder, Aug 2, 2021
    #3
  4. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi Varsha

    I think the analysis you have described is more complex than the simple check that Kamal was referring to. Companies will perform the analysis you have described to better understand the business, but Kamal is just looking at the data checks part of the course (which just checks the data is right without analysing it for any understanding or insight).

    Best wishes

    Mark
     
    Mark Willder, Aug 2, 2021
    #4
    Varsha Agarwal likes this.

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