CHAP 18

<p>The model may be too sensitive to outliers in the data. (C)</p> Signup and view all the answers

<p>It provides a balanced view considering all possible outcomes. (C)</p> Signup and view all the answers

<p>An increase in the number of claims filed. (A)</p> Signup and view all the answers

<p>Data quality uncertainty (A)</p> Signup and view all the answers

<p>Using a model that does not account for new product lines. (B)</p> Signup and view all the answers

<p>Selection error, estimation error, process error, and specification error. (B)</p> Signup and view all the answers

<p>The actuary's view of the expected value of the eventual outcome, including uncertainty. (B)</p> Signup and view all the answers

<p>To highlight potential downside risks and the potential for adverse outcomes. (C)</p> Signup and view all the answers

<p>Statistical sampling. (A)</p> Signup and view all the answers

<p>To make the estimation process more efficient. (B)</p> Signup and view all the answers

<p>Uncertainty caused by the lack of adequate data to accurately estimate parameters. (A)</p> Signup and view all the answers

<p>If an actuary lacks sufficient knowledge or expertise, they can seek assistance from colleagues or outside experts. (C)</p> Signup and view all the answers

<p>Best estimates should always include a margin of error to account for uncertainty. (C)</p> Signup and view all the answers

<p>Changes in the actuarial team (A)</p> Signup and view all the answers

<p>To manage expectations of stakeholders (A)</p> Signup and view all the answers

<p>Delphi Method (A)</p> Signup and view all the answers

<p>Variability in the claims process itself (D)</p> Signup and view all the answers

<p>An error in the calculation of the expected claim frequency (A)</p> Signup and view all the answers

<p>To provide a more accurate estimate of the ultimate liability (D)</p> Signup and view all the answers

<p>To provide a point estimate of the ultimate liability, based on current information (C)</p> Signup and view all the answers

<p>The company's risk appetite (C)</p> Signup and view all the answers

<p>A point estimate that is not inherently optimistic or pessimistic. (D)</p> Signup and view all the answers

<p>It allows for judgement and flexibility in the reserving process. (A)</p> Signup and view all the answers

<p>Difficult to perform. (D)</p> Signup and view all the answers

<p>To ensure stakeholders understand the level of uncertainty inherent in the estimates. (B)</p> Signup and view all the answers

<p>Based on a statistical analysis of past claims data. (B)</p> Signup and view all the answers

<p>The nature of the catastrophic event. (B)</p> Signup and view all the answers

<p>Use jargon and technical language to demonstrate their expertise. (D)</p> Signup and view all the answers

<p>They may not accurately reflect the true nature of the underlying process uncertainty. (C)</p> Signup and view all the answers

<p>To provide a range of possible reserve estimates, quantifying the uncertainty in the reserve. (D)</p> Signup and view all the answers

<p>The reserve estimate is based on a deterministic basic chain ladder method. (B)</p> Signup and view all the answers

<p>Parameter uncertainty (B)</p> Signup and view all the answers

<p>A change in legislation regarding the definition of ‘employee’. (D)</p> Signup and view all the answers

<p>The GLM is chosen so that the best estimate reserve it produces matches the reserve obtained through a deterministic chain ladder approach. (A)</p> Signup and view all the answers

<p>Uncertainty related to the future performance of the company's business. (D)</p> Signup and view all the answers

<p>The best estimate is a revised version of the sample mean, taking into account additional information available to the actuary. (C)</p> Signup and view all the answers

<p>The need for actuaries to adjust their best estimates based on their professional judgment and experience. (D)</p> Signup and view all the answers

The unpredictability in estimating reserves for claims due to various factors.

The most accurate single point estimate of an outstanding liability.

Factors causing uncertainty in claims estimates due to the nature of claims processing.

Factors within an organization that can affect reserve estimates.

External factors impacting reserves, like economic conditions and the insurance cycle.

Uncertainty arising from incorrect data or modeling assumptions.

The process of measuring the degree of potential deviation from a reserve estimate.

Statistical methods used to estimate the range of possible reserve outcomes.

A situation where court precedent raises the chance of claims.

Factors leading to potential variation in reserves: specification, selection, estimation, and process errors.

Bias introduced by simplifications in projecting complex systems.

Challenges in setting future parameters based on past data.

Inherent randomness of the claims process even if model and parameters are right.

An estimate indicating the uncertainty around the best estimate.

Stochastic models, alternative assumptions, and scenario testing to assess possible outcomes.

The set of all outcomes that could occur based on certain variables.

A point estimate unbiased towards optimism or pessimism, based on sound actuarial techniques and current information.

Variability in past claims data that may misrepresent true uncertainty.

Estimates reserves with different parameters than the best estimate, accounting for assumption correlations.

Analyzing the impact of extreme events to understand the upper limits of outcomes.

The process of conveying the level of uncertainty in results to stakeholders effectively.

Tailoring communication based on the audience's familiarity with the subject matter.

The relationships between different variables in a statistical model.

Actuary's mean or expected value for eventual outcomes.

Errors due to using incorrect models or programming.

Errors from model, programming, or simulation issues.

Unexpected increases in the costs of claims over time.

An estimate of the population mean calculated from a subset of data.

A method involving assumptions to estimate reserve uncertainty.

Assumptions underpinning the bootstrapping method for reserves.

The risk of loss due to financial provider failures or asset issues.

The risk stemming from internal processes or management failures.