The Actuarial Report
QUESTION
The report is about the pricing policies of the insurance product of Suncorp launched in 2009.The product was launched in the states of Queensland and New South Wales, with an advertising campaign. The advertising campaign had increased the sale of the insurance product in 2009 but at the end of 2010, the advertising campaign had been stopped. After this the sale of the insurances continued with more or less at a constant rate.(Accessed from http://www.bun.kyoto-u.ac.jp/~suchii/basic.st.html, 2012)
SOLUTION
Objective
There are basically two objectives of the report are to consider the statistical view of the following:
- The uniform pricing scheme which was launched with the product due to the support of the marketing and the legal representatives, though it was not supported by actuarial representatives.
- Changed environment due to the GFC risk management and the optimal reserving is important.
The Report
The calculations based on the provide data show that product was more successful in New South Wales than the Queensland, as there were as many as 10814 purchases of the product in the former state in comparison to the later. Out of the 17985 houses which were insured, only 3599 were of the occupied by the landlord where as the rest were of the owner occupied type. This is interesting to note that the product was sold even among the age group of 18-22, as more than 150 people were in this group. The other concern of the report is the building type; there were 11713 purchases by the owners of the brick type houses compared to the other type (6272), this was also significant. The most important thing is the claims made by the insurers. The Storm Claims were 367 only but the other claims amounted to 1337. There was a whopping loss size equal to 75570341 due to the claims. Thus this requires a differential pricing scheme for the QLD and the NSW insurers in order to increase the number of sales in QLD, and the prices schemes for the brick houses should be different from the others as they are the major claimants.
The summary Report
|
Summary statistics |
|||
| number of contracts |
17982 |
||
|
|
|||
| number of STO claims |
367 |
||
| number of OTH claims |
1337 |
||
|
claims |
losses |
||
| sum of STO claims size |
31652304 |
40822257 |
|
| sum of OTH claims size |
34748084 |
34748084 |
|
| Total |
|
75570341 |
|
| sum squared of STO claims size |
7.37151E+12 |
3.01403E+13 |
|
| sum squared of OTH claims size |
3.33907E+12 |
3.33907E+12 |
|
Conclusion
There needs to be change in the pricing scheme to decrease the losses and to increase the sale in Queensland.
References
1. The Basic Statistics, viewed on 5th may2012, <http://www.bun.kyoto-u.ac.jp/~suchii/basic.st.html>
2. Some Statistical Basics .viewed on 5th may 2012,< www.sjsu.edu/faculty/gerstman/EpiInfo/basics.htm – United States>
3. Getting Started with Statistics Concepts. Viewed on 5th may 2012,<www.statsoft.com/textbook/elementary-statistics–concepts/>
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