Note I am not talking about model building when referencing pricing.
I don’t see an option that really applies to my company.
By and large, reserve recommendations are made by a group that is independent of a pricing group, but does take input from those who would otherwise have pricing responsibilities.
And reserves are set by a committee that includes officers with pricing responsibilities.
At my company, the pricing actuaries typically also have product responsibilities. They have dotted lines to the heads of the product areas, and their bonuses are tied at least partially to their products’ performance.
The reserving function needs to be independent of product work, because of the risk of short-term personal benefit incenting poor decision-making. There does, however, need to be a free flow of information as that will benefit both sides.
Answered for my prior role in P&C, was on the reserving team and had no pricing overlap. Provided supporting documentation to pricing for filings occasionally, but that was the extent of it.
I worked on med supp for about 5 years. Reserving was done monthly and rate filing/pricing was “on going” but really we just sent stuff out to DOIs once a year
So we did both, we had roughly 10 actuaries on staff working on med supp plans
I think this counts as combined because of your last sentence.
I agree that “combined” is correct, but none of your choices includes that sort of option.
The choices read (to me at least) as: “only pricing people do it” or “no pricing people are involved”.
The intent was to see if the same people who make decisions for reserving also have pricing responsibilities. With that intent in mind, I’d pick “same group” even though there are also dedicated people doing reserving recommendations that don’t do pricing… however those people don’t have the power to decide so they don’t count as much given the above intent.
Funny that everyone but one so far thinks the way it’s currently done by them is the better. Thought there would be more malcontents
actually, in our company, there are more people w/o pricing responsibilities (in fact, do NOT have actuarial credentials) who are part of the decision making process. The CFO (non-actuary) is the one who makes a final decision, but it’s not done w/o input from our actuaries. I do not see how this situation fits into the extreme cases presented in the OP.
IMO, even if pricing and reserving are done by the same group that’s not a problem per se. It’s a problem though when answers from one approach drive answers in the other [usually reserving driving pricing], because reserving and pricing are trying to answer fundamentally different questions.