Casualty Actuarial Society Ratemaking Seminar Las Vegas, 2001 INT-1

Casualty Actuarial Society
Ratemaking Seminar
Las Vegas, 2001
Introduction to Data Management
Al Hapke
Your Role in Data Management
• Demanding User
• Lack of defined needs
• Lack of knowledge about information
• Lack of business knowledge in the IT staff
Therefore, you must communicate your goals
effectively and clearly.
Objective of Data Management:
To store and organize data in a way that
allows the analyst to answer questions about
the business.
These questions should help direct and guide
the management of the business.
Processing Systems are not adequate to satisfy
the analytical needs of the company.
They’re designed to do work, not answer
Steps That Help Communication:
• Formulate many specific questions
Brainstorm yourself
Talk to your customers/clients/boss
Read actuarial papers
Review competitive rate filings
• Write them down
• Design your spreadsheet or model to answer the
• Determine what you need to populate the
Example of Questions:
What do we expect to pay for claims in this
class vs. other classes?
Age/experience of driver
WC class code
Property construction
Other characteristics such as credit rating,
new/renewal, etc.
Issues with this Question:
• Volume in each class or characteristic
• How much history?
• Can premium be appropriately matched
with losses?
• Can earned exposures be captured?
• Can class definitions be multidimensional?
Other Questions:
• What is our exposure to maximum loss?
– Answer can be found in limit/location studies
• How much development can we expect on
reported losses?
– Considerations:
• Report date
• Historical claim distributions
Other Questions (continued)
• Has our underlying book of business changed?
– What types of losses are we seeing?
• This is only meaningful if we have been profiling
our mix of claims so that we can see what’s
• e.g
– Size of loss at consistent points in time
– Minor coverage detail
– Cause of loss
Other Questions (continued)
• Who, how much, and what is your producer
What are the characteristics of the business
being brought in the front door?
Or…. Leaving through the back door?
Issues to Consider in Your
Management Information System
• Ease of Access - level of independence from
• Flexibility - new classes, new
characteristics, new products
• Quality of data