The Price Is (Actuarially) Right
What is the average pass rate for early actuarial exams?
55%
What are 2 approaches to rating? (Hint: Actuaries use these too)
Experience Rating
Exposure Rating
This term is what most specialty insurance products start as before evolving into formal products based on demand.
Manuscript endorsement
What 3 features define specialty insurance?
Risk Uniqueness
Customization/Complexity
Underwriting Judgement
(Bonus: Lack of data)
True or False: When two brokers submit the same account, both submissions can proceed to quote.
False (once one clears, the other is declined)
What is an actuary's go-to tool for spotting patterns in claims over time?
Loss triangles
Share at least 1 of the warning signs that the rates a carrier is charging might be inadequate.
- Loss ratio consistently above targets
- Competitors exiting the line
- Growing gap between actuarial indications and UW's final premiums.
- Renewal retention above 95%
- Parametric hurricane coverage
- Systemic cyber event coverage
- ESG liability coverage
Name each stage in the insurance cycle.
Catastrophe -> Hard Market -> Capital Enters -> Soft Market
This is the maximum number of stories a building can have before it becomes an instant decline for Property.
6
What are the 2 insurance building blocks that actuaries can use as a starting point for determining premiums? (Hint: This is an insurance fundamental)
Frequency & Severity
What are the 3 cardinal rules of rate-making?
Adequate
Not Excessive
Not Unfairly Discriminatory
What are the 4 teams that typically work together on product development?
- Underwriting
- Actuarial
- Legal & Compliance
- Operations & Technology
What are the 2 claims philosophies?
Adversarial & partnership
In Hiver, before starting a submission, you change the status to this so you don't collide with another entry person working the same account.
Entry in Progress
How many exams would a P&C actuary need to complete to achieve the Fellowship designation?
10
Tell me at least one of the biggest challenges with rating one of the following lines of business? Property/CAT, Casualty/GL, D&O/E&O
- Catastrophe years can generate 5-10x normal losses.
- Social inflation and nuclear verdicts are driving severity spikes that historical models never predicted.
- Claims take 4-7 years to settle, so today’s pricing is tested years from now.
What is at least 1 warning sign that a newly launched insurance product is heading for trouble?
- Coverage creep without re-pricing
- Adverse selection at launch
- Correlated loss accumulation
- Regulatory mismatch
What are the five stages of the policy lifecycle? (Hint: It starts with a "Quote")
Quote, Bind, Issue, Endorse, Renew
For GL coding, the codes differ depending on whether a building is at, under, or above this height threshold.
3 stories
What are the 3 main methods an actuary uses to predict pricing?
Experience Rating
Exposure Rating
Trend Analysis
What is the formula for gross premium?
Pure premium + expenses + profit = Gross premium
Name the 5 stages of the product development lifecycle.
1. IDENTIFY the need
2. DESIGN coverage
3. PRICE the product
4. FILE and approve
5. LAUNCH and refine
What are the six building blocks of every insurance policy? (Hint: Policies usually start with a Declarations page)
1. Declarations (dec page) 2. Insuring Agreement 3. Definitions 4. Conditions 5. Exclusions 5. Endorsements.
What are the ACORD #'s for GL and Property?
Property = Acord 140
GL = Acord 126