hello! I have few questions regarding the tasks:
Task 1 - What are types of conservatism are we writing for this task? I see that we need to write a brief description for each reserve estimate, do we have one for Completion Factor Approach?
Task 2 - What is the range of the premium rate did you get? I get around $210.
Task 3 - To derive the total termination rate, do we add the lapse rate and qx for each age?
Thanks!
For task 3, which mortality table do we select? There are two versions of the 2012 Individual Annuitant Mortality – Basic and Period (which includes a margin)
For 3) I think we need to use the 2008-11 LTC Insurance persistency report from the soa website
I got around $210 as well.
I have the same question. should I use IAM basic table or IAM period table? I guess I will go with the basic table.
Idk of anyone is still working on this but for refinements to address the cash flows in task 3, what did anyone suggest? I’m thinking of just recommending reserves be set up and investment strategies be explored, but I’m not sure if i then need to build that into the model. Or if I am missing something and should be refining the product itself.
Task 1
Still unclear on “the types of conservatism included in each estimate”. It seems that my 3 methods are all best estimates without any conservatism.
I see an 18% margin on original calculated reserve in excess of runout for the “2017 runout associated with claims from 2016 and earlier”. Could I just add an 18% margin for adverse deviation to the 3 approaches and call that my final recommendation? Or are there other types of conservatism I’m not seeing in this exercise?
Is averaging the completion factors/inc claims estimates over several months a “type of conservatism”?
I noted that there was likely some margin implicit in the trend assumption used in a couple of the methods – if you look at the experience, historical trend is much lower than the reserving trend. I decided to change to use the historical trend and then add an explicit margin at the end instead.
Thanks for the response. I notice this also now. I lowered my trend to fit with an average of rolling 12 trends based on what I see in the historical experience(rounded up to the nearest 1%). This made my BF and inc clms methods closer to the CF method estimate.
I’ll still use the margin I see in the claims runout as my MfAD.
Did everyone just pick one lapse table to use for task 3?
Ya I didn’t get much of a difference in premium between the two. I don’t think it matters.
Task 1, bullet 2: is this asking us to sum the total amount of paid claims in 2017 for incurred claims in 2016? My understanding is that the run out in 2017 would reflect the IBNR @ 12/31/16 and it’s just asking us to compared the $2.4M to the actual, which we have. This seems overly simplistic and I want to make sure I’m not misinterpreting what they are asking.
Hi all,
I’m working on this module right now and struggling a bit on Task 3 to get premiums that make sense. Maybe I’m being dense - but in determining the total term rate are we supposed to take voluntary lapse rate * qx? Add them? Do some other calc?
Any help would be appreciated.
Nevermind - I went back to my MLC roots and remembered how multiple decrements work!
Anyone working on this or know of any google groups/other resources that might help? Kinda bummed that the old AO threads aren’t accessible anymore.
i’m currently working on it, but i’m also in the camp of “could use some help”. missing the good old AO days as well. if there’s a group, please let me know (or we could start one i suppose).
Is anyone currently working on this?
I’m currently working on it. I think I’m pretty much done with the calcs, now working on putting together the explanations/memos. I’d be happy to bounce ideas off each other.
For Task 1, the part where we have to calculate the financial impact comparing the reserves for incurred in prior years and paid through 2017 to the actuals, do we have to explain how the break out of favorable/unfavorable impacts the financials similar to what has been explained in PPA of the module? Also, is this what should be used as a guide for conservatism?
For those who skip straight to the EOM exercise.
On task 2, read the instructions & first spreadsheet on page 44 of the Module (1.3.23). This helped me understand what they are looking for when calculating the plan design factor.
Also, ‘Tab12’ on the spreadsheet linked on page 57 (1.3.36) provides an example of how to calculate the premium rate.