This is a supervised reading course covering the detailed theoretical and practical understanding of the operation and regulation of the general insurance industry and the actuarial management of risks undertaken by general insurance companies.

Qualifying as a Fellow of the Institute of Actuaries of Australia (IAAust) requires you to pass specialist Part III subjects (4 exams in all). General Insurance is one of specialist subjects available to be attempted. In terms of content, STAT8048 presents a subset of the IAAust General Insurance subject, but it does NOT provide for any exemption whatsoever from any part of the IAAust Part III program.

Upon successful completion of the requirements for this course, students will have a practical understanding of the operation and regulation of the general insurance industry and the actuarial management of risks undertaken by general insurance companies. In particular students will be able to:

1. Explain the main classes of general insurance, the major operations of GI companies, and understand GI accounts.

2. Understand and apply the processes for determining premium rates and pricing of GI policies, including:

• Risk premiums and sound premiums
• Risk classification techniques including GLM
• The role of actuarial valuation techniques
• Identification of factors to be considered in the premium rating process
• Apportionment of expenses

3. Understand how reinsurance is applied in the context of GI.

4. Apply a range of valuation techniques for claims experience and estimation of outstanding claims, including:

• The chain ladder method, payments per claim incurred and finalised, projected case estimate, Bornhuetter-Ferguson, and bootstrapping approaches
• Selection of appropriate valuation methods and assumptions

5. Understand the processes for estimation of GI liabilities, including:

• Philosophy of reserving and valuation
• Practical issues in calculating outstanding claims liabilities
• Unearned premium and unexpired risk

6. Understand the issues involved with the measurement and management of solvency and the concept of risk based capital

• Assignment 20%
• Mid-semester Examination 20%
• Final Examination 60%

Details about assessment may change during the first two weeks of semester. Please ensure that you check with your lecturer or tutor about any changes. Changes to the assessment schedule will be posted to the Wattle site. Further details regarding the assessment of the course will be announced in lectures and on Wattle.

It is anticipated that students will spend on average 5-10 hours per week on the course. This includes attending the discussion session, studying the course material, preparing solutions to question sets and assignments and preparing for exams. Students who are finding concepts difficult may need to devote considerably more time to the course. Students will be expected to spend a greater proportion of their time on this course in the lead-up to the assignment and final examination in revising the material and past exam questions or other forms of exam preparation.

At least an average of 65% (or equivalent) in the final two years of an Australian undergraduate degree with at least two years of university level statistical and mathematical study including calculus and linear algebra, as well as mathematical statistics and linear regression theory.

Hart, Buchanan and Howe, Actuarial Practice of General Insurance, Institute of Actuaries of Australia, 7th Edition, 2007.

This is available from the Institute of Actuaries of Australia. Instructions on obtaining a copy of the textbook will be discussed in the first week of semester.

Students will be required to supply a calculator. A basic knowledge of Microsoft WORD and EXCEL is assumed.

More information about this course may be found on the College of Business and Economics website, and Wattle, the University's online learning environment. Log on to Wattle using your student number and your ISIS password.