Data quality

Question 1

Sources of data quality issues

Answer 1

• Poor management control of data recording/verification processes
• Poor design of data systems

Question 2

Ensuring good quality

Answer 2

• Normally insurers use the proposal form to obtain information from individuals
• It is important for the proposal form to produce relevant and reliable information
  for the system
• Questions need to be well designed and unambiguous so that there proposer will
  give full, correct information and the underwriting department can enter the info ,
  adding any coding required
• Ways of improving the proposal form
  ▪ Try and be quantitative in nature of questions
  ▪ Use of tick on boxes- ensures clear and correct info given
  ▪ System should input the information in the same order as the proposal
  ▪ Data checks are important ( validated by the system)
  ▪ Send policyholder a copy of key info and ask for verification

Question 3

Risk factors

Answer 3

• These determine the intensity or impact of a particular risk
• Driving ability is a risk factor ( cannot be measured directly without the use of
  telematics and constant monitoring ) , hence for that past accident risk is used as a
  rating factor ( proxy for driving ability )

Question 4

Rating factors

Answer 4

• Measurable characteristics of the a particular risk that will affect the size and/ or
  likelihood of claim
• May be used as proxies for risk factors that cannot be measured directly

Question 5

Examples of rating factors for general motor insurance

Answer 5

Age
▪ Gender
▪ Any other drivers on the vehicle
▪ How long the person has been having driver’s license for
▪ Number of convictions on motoring offences
▪ Number of past motoring accidents
▪ Type of cover ( third party only, comprehensive )
▪ Make and model of vehicle
▪ Age of vehicle
▪ Use of vehicle ( business, pleasure)
▪ Postcode (location)
▪ Where vehicle is stored over night

Question 6

The use of proposal form information when assessing claims

Answer 6

• The info on the proposal form will need to be held for different purposes including
  cross-checking against the claim information at time of claim
• Endorsements : changes that are made to the policy
• The claim form should be designed in a way that the info provided can be analysed
  accurately and transferred easily to the computer system

Question 7

Data that needs to be captured by insurance company and claim record

Answer 7

▪ Details of risks covered
▪ Detail of cover ( level of any excess, maximum pay-out)
▪ Details of claim
▪ Status of present record
▪ Control dates (start, end date of each record, dates of claims )
▪ Relevant amounts ( sum insured , premiums, claim amounts) and admin details

Question 8

Data issue for employee benefit schemes

Answer 8

• Data required for a valuation of employee benefit scheme will be provided by the
  scheme sponsor
• There are cases where the actuary does not have full control over data available
  o Need to emphasise to the sponsor the importance of quality data

Question 9

Characteristics of good quality data

Answer 9

▪ Complete
o Data should not have missing values or miss data records
▪ Accurate
o The data needs to be accurate ( no errors )
▪ Up to date
▪ Consistent with previous data
o data should have the data format as expected and can be cross
reference-able with same results
▪ At the level of detail required
▪ Relevance
o Data should meet the requirements for the intended use

Question 10

Data requirements

Answer 10

• Data will be required to place a value on the benefits entitlement of individuals
• Need data that is likely to be financial significant to the level and timing of benefits
• Data will be required in respect to :
  ▪ Individuals that have an entitlement to receive benefits in the future ( active
  and deferred members )
  ▪ Individuals who are currently receiving the benefits ( current pensioners )
  ▪ Data will need to be sufficiently detailed to provide all information that is
  likely to be financially significant