Data sources

Question 1

Publicly available data

Answer 1

• data collected in relation to the
  population of a country as a whole
• includes data on government
  inflation, employment and
  population statistics
• labour and economic data
• data from other countries
• regulatory data
• industry data
• company published data
• national statistics
• competitor published data

Question 2

Internal data (company data)

Answer 2

• product providers need info in
  relation to individuals they provide
  cover for
• quantity and quality of this data is
  essential
• quantity : data groups will either be
  non-homogenous or lack credibility
• quality : insurers that the results
  produced are reliable

Question 3

Industry wide data collection schemes

Answer 3

• summaries are made by
  organisations that collect data
• these cannot be used in place of
  policy data to establish provisions
  for policy
• but could be used to determine
  ( useful for
  new small insurers-lack internal
  data )

Question 4

Other external resources - Reinsurers

Answer 4

Normally provide cover to insurers
in different territories
- Can provide useful data and
information to insurers launching
new products , or wish to sell
existing product to new target market
- This data may assist in pricing and
reserving especially when own data
and experience is limited

Question 5

Potential benefits from using industry wide data

Answer 5

Can compare own experience with that of the industry as a whole with regards to
▪ Overall level and pattern of the experience by categories in which data are
classified

Question 6

Possible reasons for heterogeneity (industry data)

Answer 6

There is risk for possible distortions arising from heterogeneity
- Data supplied by different organisation may not be comparable because of :
▪ Companies operate in different geographical or
▪ Different socio-economic sections of the market ( target market )
▪ Policies sold by the diff companies may not be identical ( different terms ,
options and features )
▪ Sales methods may not be identical ( different distribution channels )
▪ Company may be having different practices e.g. underwriting or claim ata
stored by two companies may be different
▪ Coding used for risk factors may vary organisation from organisation
- This raises the need to be careful when interpreting industry data ( it may not be
relevant )

Question 7

Problems with industry wide data vs internal data

Answer 7

▪ Data will be less detailed than those available internally
▪ Data will be less flexible than those available internally
▪ External data are often more out of date than internal data
▪ The data quality will depend on the data systems quality of all its contributors
▪ Not all organisations contribute ( not representative of the market as a whole)