Insurance Actuarial Reporting Solution Overview

Corporate Actuaries create financial projections and determine policy valuations enabling insurance companies to reserve the right level of capital to best service their policies. Often the results are iterative whereby assumptions like interest rate scenarios or claims forecasts are changed to reflect various business scenarios. Additionally, these models are computer intensive, and it is not practical to rerun the models within the typical tight required timelines. Manual adjustments are used as an alternative to re-executing the model.

Even when sophisticated insurance modeling and calculation engines e.g. MG-ALFA (Millman) are utilized, the results are rarely ready for reporting. Manual adjustments are still typically needed to reflect specific state regulations or corporate policies not covered by the calculation models.

The Insurance Actuarial Reporting Solution seeks to “finish the job”, standardizing and applying the business rules required to make the policy level projection, valuation and risk data ready for GAAP and statutory reporting. It will free up your Analyst resources so that they can do analysis as compared to report preparation.

The Insurance Actuarial Reporting Solution makes it possible to integrate data from all source systems and calculation engines into one “sanctioned” reporting repository while ensuring that supporting rules, regulations and policies are all met. Actuarial iterations and analysis can be orchestrated through concurrent workflow thus reducing time to market, time in market and costs related to your risk management efforts.

Since many of these calculations and reports are subject to regulatory oversight, data lineage is also a key component of the solution. Data Lineage provides full traceability from source to target allowing one to follow the data and seeing what has changed along the way. Additionally, the solution’s Business Glossary is key to standardizing the definition of policy attributes (whether calculated or from the source), insuring they are used consistently amongst the actuarial and financial groups.

Unique to his approach is the ability to manipulate the actuarial calculations themselves. For example, rather than having to rerun a multi-hour (often multi-day) stochastic model, our solution allows you to manipulate the various model attributes by applying specific formulas for the common variants needed, like new policy profiles (ANBP), interest rate sensitivities, and mortality/morbidity factors. Consider new policy models as a simple example. As new policy premiums rise, expenses related to the acquisition of those new policies (like commissions) rise as well. Our reporting solution allows you to define the relationship between new policy premiums and commissions, and then rapidly adjust the model to reflect changes based on various iterations of new policy forecasts.

The ability to rapidly iterate through multiple scenarios offers tremendous business benefit. Once a model is generated, the automated management of the model and its associated attributes gives Actuaries new capabilities to use their models in whole or in part as business needs dictate throughout the year, for example cash flow analysis, accuracy review, or even to access the impact of the swine flu (H1N1) to claims. Using the Insurance Actuarial Reporting Solution, Actuaries can rapidly make midyear changes to a previous model that they never would have had enough time to set up and implement other than as a top line adjustment.

Summary of Capabilities

  • Consolidation of all actuarial data (policy, expense, claim, valuation, projection) into a unified data repository, with conforming reporting dimensions like product, company, sales outlet, and line of business.
  • Support for the typically iterative process of producing policy valuation, reserve and projection calculations. Features like snapshots and projects allow the various versions to be kept and compared to each other.
  • Support for the automatic notification and distribution of actuarial results, for example to Finance, once those results have been approved.
  • Ability to dynamically apply “what if” scenarios to changing factors like:
    • New business premium assumptions
    • Deferred acquisition costs
    • Interest rate sensitivities
    • Cash flow testing
    • Claims assumptions
    • Morbidity/Mortality
  • Ability to create hypothetical Financial Statements based on financial models.
  • Ability to report the affect of valuation and financial model changes in standard GAAP and Statutory Income Statement Formats and post changes to the General Ledger (GL).
  • Ability to perform year over year model and scenario comparison reporting, including the ability to integrate and compare models from different time grains (monthly models can be integrated with quarterly or annual models).
  • Ability to generate GL Journals for financial or plan postings.
  • Support for any major Business Intelligence Reporting tool, the solution is not reporting toolset specific.

We are currently demonstrating this solution to several of your peers in the industry. We’d be happy to arrange for a webcast demonstration to explore these capabilities with you further and to identify those features that offer the highest benefit to you and your organization. Please let me know if you would be interested in scheduling further discussion with us regarding this exciting new solution. I look forward to speaking with you again soon.