Download - WCM 2010 - Actuarial Science 101
®
“Actuarial Science 101”A Basic Introduction to its Application to
Estimating Warranty Costs
Michael Paczolt, FCAS, MAAAConsulting Actuary
Milliman
March 4, 2010
®What is an actuary?
• Background• Finance, Mathematics, Statistics• Rigorous Exams
• Classic Role• Pricing• Reserving
• Other Fields• Firm Valuation• Investments• Portfolio Management• ERM & DFA
®Where do actuaries work?
• Types• Consulting• Insurance• Other
• Fields• Health• Life• Pension• Property/Casualty• Other
®What determines my premium?
• Expected Loss• Expense• Profit• Risk Loads• Market Conditions• Underwriting• Book of Business• Credibility of Data
®Vocabulary
• Trend• Liability = Ultimate Loss – Paid Loss• Unearned Premium Reserve• Loss Reserve• Exposure
®Loss Triangles
• History as predictor of future• Paid & Incurred Methods• Group of similar aged warranties• Observe development• Update periodically
®Warranty Methodology
• Loss Development
• Incremental
• Bornhuetter-Ferguson
• Frequency/Severity
• Loss Cost