Monitoring

Question 1

What is the reason for monitoring?

Answer 1

• determine if assumptions need to be updated
• monitor trends in experience
• compare actual vs. expected and see if corrective action needed
• determine if pricing and reserves are sufficient
• provide management with information

Question 2

What are the reasons for AOS?

Answer 2

• determine financial effect of divergence from assumptions
• financial effect of writing new business
• valuation check
• regulation purposes
• determine trends on experience
• determine the non-recurring components of surplus to be used for distribution to with-profits PH
• for EV analysis reasons
  – check data, assumptions and methods
  – use to determine executive remuneration values
  – information to be included in company accounts

Question 3

How can the results be used?

Answer 3

Health and care
process
- improve pricing basis
- capital allocation methodology
- improve underwriting process
- change reinsurance strategy
policy
- policy design
- wording of policy contracts.
marketing
- improve marketing message
- improve sales procedures and commission structures
- improve staffing

Retirement funds
- revising the investment strategy
- providing feedback to the sponsor
- improving the valuation basis.

For all benefit arrangements
- establishing and revising the reserving and valuation basis - improving systems and data recording processes.
- improve underwriting process