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Ratemaking Seminar 2002

Ratemaking Seminar 2002. The Convergence of Technology, Data Standards & Analytical Tools Actuarial Standards - 23 Arthur R. Cadorine - ISO. Forewarned Is Forearmed. Current economic slowdown could be a lot worse Electronic linkages identify problems sooner Insurers ride their roller coaster.

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Ratemaking Seminar 2002

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  1. Ratemaking Seminar2002

  2. The Convergence of Technology, Data Standards & Analytical ToolsActuarial Standards - 23Arthur R. Cadorine - ISO

  3. Forewarned Is Forearmed • Current economic slowdown couldbe a lot worse • Electronic linkages identifyproblems sooner • Insurers ride their roller coaster

  4. Insurance Industry Standards • Standards for policy and claim transactions are being developed • ACORD • IAIABC • IDMA • These standards will change the industry

  5. Impact of Standards • If everyone speaks the same language, communication is possible • Information quality and timeliness improves

  6. Data StandardsWho Needs’Em and Why? • Trading partners such as insureds, insurers, TPAs, vendors, and brokers • Various sources use different definitions • Need data that is clean and consistent • Reduce duplication and cost • Numerous indirect benefits • Some obstacles remain

  7. Data StandardsDon’t They Exist Already? • Financial services and some retailers use data standards • Some insurance standards developed for specific applications • Standards are not identical

  8. Data StandardsCurrent Working Groups • IDMA TPA Data Standards Work Group • ACORD • ANSI • RIMS • ISO • WC Insurance Organizations (WCIO)

  9. Data StandardsCurrent Tools • PDRP - GL database for public entities • IDMA Claims Data Exchange Standard • IDMA Policy Data Element Dictionary • IDMA TPA Data Standards White Paper • www.idma.org/DS-announce.html

  10. Value of Knowing Sooner • Delays in claims reporting cost money • Real-time fraud detection could save $$ • Early claim-trend detection means corrective premium action

  11. Insurers: Historically Slow Adopters • Insurance has historically been slowto adopt new technology • Why is it going to change? • More timely business intelligence means a competitive advantage

  12. Integrating EDI Reporting • Straight-through processingbecomes possible • Data quality improves • Information can be aggregated • ASP model has many advantages

  13. Integration of Data • ASP can have policy and claim databases • Systems can talk to one another • One source/multiple outputs

  14. Analytical Tools • Predictive models • Web access • User-friendly report writers • User-friendly analysis software

  15. THINK ABOUT IT! • Cheaper information • More timely information • Better information

  16. ASOP #23: Data Quality • Purpose is to give guidance in: • Selecting data • Reviewing data for appropriateness, reasonableness, and comprehensiveness • Making appropriate disclosures • Does not recommend that actuaries audit data

  17. ASAP #23: Data QualityConsiderations in Selection of Data • Appropriateness for intended purpose • Reasonableness, comprehensiveness, and consistency • Limitations of or modifications to data • Cost and feasibility of alternatives • Sampling methods

  18. ASOP #23: Data QualityDefinition of Data • Numerical, census, or class information • Not actuarial assumptions • Not computer software • Definition of comprehensive • Definition of appropriate

  19. ASAP #23: Data QualityOther Considerations • Imperfect Data • Reliance on Others • Documentation/Disclosure

  20. Ratemaking Seminar2002

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