Modern business runs on data

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The Risk Institute is developing underwriting policy, including rates calculations using actuarial methods and definition of the key parameters of insurance based on the analysis of insurance risks.

Application of actuarial calculations in relation to underwriting allows one to:

• get an alternative view of the company rate policy, having performed calculation of insurance rates using actuarial methods in the context of insurance products, regions, sales channels, brands and models of cars and other segments of the portfolio;

• make underwriting more reliable and expeditious since actuarial methods allow to take into account recent data periods with greater accuracy;

• identify hidden factors, correlations and trends that define unprofitability;

• compare key indicators of market data, based on extensive statistical database of the Risk Institute;

• build a comprehensive forecast of the outcome of insurance for different models and scenarios;

• compare the results of calculations of the underwriters and actuarial valuations, which in turn strengthens the basis for managerial decisions.

Actuary role in underwriting

For high-quality underwriting, primarily in mass types of insurance (transport, medical), one needs a considerable amount of data that a private company can accumulate only over the years. On the other hand, the data collected a decade ago, does not reflect the current situation: it does not take into account fundamental changes in legislation, settlement of claims, changes in the content of the insurance contracts and line of insurance products.

A more careful choice of mathematical models and analysis of global dynamics and trends help to find a compromise between the lack of data and timeliness, which is possible only if you have access to a wide enough information field.

To build an adequate model one requires an analysis and understanding of hidden factors and correlations that determine the structure and dynamics of unprofitability. The revision of underwriting policy shall be conducted in the context of the periodic loss of control, where the role of the actuary is also extremely important.