MODULES

Aim
The aim of Life Insurance course is to ensure that newly qualified actuaries have the ability to apply the actuarial scientific method and actuarial techniques necessary to enable long-term insurance business to be operated on sound financial lines.

Objectives
With reference to insurers carrying long-term insurance business in Hungary, the trainee actuary will, on completion of the module, be able to:

• demonstrate the knowledge of the underlying framework, i.e.
• define the principal terms in use in long-term insurance business,
• describe the main features of the major types of long-term insurance business products, including different methods of policyholder participation in profits,
• describe the main features of the Hungarian long-term insurance market,
• state the principal tax, legislative and statutory controls as they affect Hungarian long-term insurers,
• describe the major areas of risk and uncertainty in long-term insurance business,
• describe the operation of the main types of reinsurance contract used in long-term insurance business,
• describe the role of underwriting, the underwriting process and the impact of selection and anti-selection,
• state the principles of investment for long-term business insurers’ assets,
• apply the actuarial philosophy and the actuarial scientific method to the financial management of long-term insurance business by:
• describing valuation data and verification procedures,
• analyzing the experience of a long-term business insurer,
• evaluating the liabilities under a long-term insurance contract (including a reinsurance contract), in terms of emerging costs and in terms of present values, for the purposes of product pricing, having regard to commission and other expenses,
• evaluating the liabilities (including commission and expenses) under the existing contracts of a long-term business insurer (or reinsurer) and the corresponding assets, in terms of emerging costs and in terms of present values,
• evaluating the present value of the expected future profit from the existing contracts of a long-term business insurer,
• analyzing the main sources of profit of a long-term business insurer,
• evaluating the liabilities under guarantees and other options for the purposes of pricing and reserving,
• evaluating the terms for the surrender or other alteration of a long-term insurance contract,
• evaluating the capital requirements of a long-term business insurer for the purpose of determining new business strategy, and
• analyze straightforward problems in terms of the actuarial scientific method, to a level where they may be processed by appropriate actuarial techniques, i.e.

• determine the design of and appropriate pricing assumptions for long-term insurance contracts marketable in Hungary
• determine appropriate bases for varying a contract on terms that are not guaranteed,
• determine appropriate methods and bases for valuing the assets and liabilities of a long-term insurer, for the purposes of
• determine appropriate bases for the purpose of determining the expected profit from the existing business of a long-term insurance,
• analyze the appropriate ways of determining bonus distribution policy and achieving equity between different groups of policyholders,
• determine appropriate reinsurance arrangements for a long-term business insurer,
• analyze the asset-liability matching requirements of a long-term business insurer and show how actuarial techniques may be used to develop appropriate strategies.