methodology

Risk

The potential for uncertain events or circumstances to have negative consequences on objectives

Asset of a life office

An item or property owned by a life insurance company that has economic value and can generate future financial benefits eg a portfolio of bonds

Risk

The potential for uncertain events or circumstances to have negative consequences on objectives

Asset of a life office

An item or property owned by a life insurance company that has economic value and can generate future financial benefits eg a portfolio of bonds

Discount rate

A financial concept used to determine the PV of future cash flows and liabilities

Micro insurance company

An insurance company that provides insurance products specifically designed for low-income individuals or groups who have limited access to traditional insurance services

Service level agreement

A legally binding contract between a service provider and a customer that outlines the expected level of service eg quality, availability and responsiveness

Types of advice

Indicative- opinion w no facts/research

Factual- opinion based on research

Recommendation- involves research, models, forecasts

Types of regulation

-prescriptive

-freedom of action

-outcome based

Defined contribution

Benefit depends on contributions paid in respect of that member

Defined benefit

Scheme rules define the benefit independently of contributions payable and investment returns

Derivatives

Finance instruments whose value depends on the value of an underlying asset or variable

Wholelife product

A permanent life insurance policy that to provides lifetime coverage on fixed premiums

Funeral service plan

Predefined funeral services payout eg coffin, transport

Funeral cash plan

A lump sum cash payout upon death of the insured

Medical aid plan

Members pay a regular fee in exchange for financial coverage of medical expenses eg medicine, doctor visits, hospital stays

Hospital cash plan

Predetermined cash amount with fixed Daily cash during hospitalization

Occupational pension scheme

A workplace sponsored retirement plan where employees contribute to provide retirement benefits

Reinsurance

An arrangement where an insurer transfers a portion of its risk to another insurer to limit exposure to large claims

Retention limit

The maximum amount an insurer will pay for a single claim before reinsurance covers the excess

Risk premium basis

A reinsurer pricing method where the reinsurer charges a premium reflecting mortality risk

Board of directors

A group of individuals appointed to represent interests of shareholders or stakeholders and oversee the strategic direction and governance of a company

Actuary

A professional who applies mathematical and statistical techniques to assess and manage risks in insurance, pensions and other financial fields

What makes the ACC a cycle

Because it represents a continuous, iterative process. There are feedback loops and a dynamic environment allowing adaptation

Why’s the ACC actuarial

-long term horizon

-considers tax, competition, legislation, stakeholders etc

-involves estimating the financial impact of uncertain future events

-use of modeling and result interpretation to develop strategies

-involves making assumptions using historical data

-monitoring and periodically analyzing the emerging experience to update models

Soft market and how it occurs and persists

A period of low insurance cause of high competition. Occurs bc of excess capital in the industry and persists bc of low claim frequencies encouraging price wars

ACC

A systematic process/tool used to solve actuarial problems and manage risk