Covers 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.

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%

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.

STAT3038/STAT6045

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

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

See course website