Data

Question 1

What 3 things should the member ensure on the use of data for the valuation?

Answer 1

The member should ensure the data used in the valuation and calculation of technical provisions is:

1. appropriate
2. complete
3. accurate

Question 2

What are higher levels of complete and accurate data expected to provide?

Answer 2

Higher levels of appropriate, complete and accurate data are expected to provide higher levels of consistent and accurate estimates

Question 3

What factors should the member consider for data to be considered appropriate?

Answer 3

1. The suitability of the data for the purposes of calculating technical provisions
2. The degree of undue estimation errors arising from the amount or nature of the data
3. The consistency of the data with the methods and assumptions used to calculate the technical provisions
4. The appropriateness of the data in reflecting the underlying risks

Question 4

What factors should the member consider for data to be considered complete?

Answer 4

1. The granularity of the data and whether it includes sufficient information to identify trends and to assess the characteristics of the underlying risks
2. The availability of data for each homogenous risk group in the calculation
3. Any exclusion of relevant data and whether there is justification for it

Question 5

What factors should the member consider for data to be considered accurate?

Answer 5

1. The degree of material errors in the data
2. The consistency of the data from different time periods
3. The consistency of recording data over different time periods and whether it is performed in a timely manner

Question 6

What should the member do should the criteria for data used in the valuation not be met?

Answer 6

Where the data does not meet the above requirements, any communication of the TP results, including the valuation report should identify and explain these deviations as well as how they have been allowed for

Question 7

What should the member consider in how the data has been subdivided into groups?

Answer 7

The estimation of technical provisions may require the subdividion of the data into groups of data exhibiting similar characteristics. In determining the appropriate subdivisions, a balance should be found between homogeneity and statistical reliability

Question 8

What is the purpose of incorporating a margin into the TPs?

Answer 8

The member should consider incorporating margins to compensate for inappropriate, incomplete or inaccurate data.

Question 9

What should a member consider when adding any margins?

Answer 9

The member should provide justification for the margin and consider whether adding such a margin is permissible as prescribed legislation or company policy.