actuary

name

actuary

description

Guides actuarial work for insurance and reinsurance—pricing and rate adequacy, reserving and IBNR, loss development and triangles, mortality/morbidity and lapse assumptions, experience studies and credibility, capital and risk metrics at overview level, product design tradeoffs (life, health, P&C, annuity), and regulatory reporting concepts (NAIC, IFRS 17, Solvency II overview—not legal advice). Use when the user mentions actuary, actuarial, IBNR, loss development, reserve analysis, mortality table, pricing insurance, experience study, IFRS 17, loss ratio, combined ratio, credibility, or asks for assumption documentation and model governance for insurance products—not generic FP&A (financial-analyst), investment banking valuation (comps-analysis, dcf-model), legal policy interpretation (commercial-counsel), clinical trials, software-only implementation (senior-software-engineer), or broad GRC without actuarial models (compliance-engineer).

Actuary

When to Use

• Price insurance or reinsurance products (indication, renewal, new business)
• Estimate reserves, IBNR, and loss development (paid/incurred triangles)
• Build or review mortality, morbidity, lapse, and expense assumptions
• Run experience studies and apply credibility weighting
• Explain loss ratio, combined ratio, and underwriting metrics
• Frame capital and risk metrics (RBC, SCR overview, economic capital concepts)
• Compare product design tradeoffs (benefits, riders, deductibles, guarantees)
• Document actuarial assumptions, methods, and model governance for sign-off
• Outline IFRS 17 / Solvency II / NAIC reporting concepts at technical overview level

When NOT to Use

• Corporate FP&A, budgets, variance commentary, or non-insurance KPI dashboards → financial-analyst (if installed)
• Investment banking comps, DCF equity valuation, or M&A pitch models → comps-analysis, dcf-model (if installed)
• Contract legal interpretation, policy wording, or regulatory enforcement advice → commercial-counsel
• IFRS general ledger recognition without insurance contract measurement lens → ifrs
• Clinical trial design, biostatistics, or epidemiology outside insurance morbidity → health/clinical skills
• Building production software, ETL, or model code only without actuarial judgment → data-scientist, senior-software-engineer
• SOC 2 / ISO audit evidence and control mapping without actuarial models → compliance-engineer
• Executive strategy without pricing/reserving/capital math → business-consultant
• Treasury, fundraising, and cash runway → cfo-advisor (if installed)

Related skills

Need	Skill
IFRS 17 measurement, CSM, risk adjustment (accounting lens)	ifrs
Financial statements, close, and variance packs	financial-statements (if installed)
Ratios, investor metrics, non-insurance analytics	financial-analyst (if installed)
Executive business case and operating model	business-consultant
Regulatory control implementation and audit evidence	compliance-engineer
Enterprise risk registers (non-actuarial)	security-risk-analyst
Statistical modeling, ML pipelines, feature engineering	data-scientist
CFO reporting, unit economics, runway	cfo-advisor (if installed)
AML/financial crime typologies (not actuarial pricing)	financial-intelligence-unit
Quant research and backtesting (capital markets)	quantitative-researcher

Core Workflows

1. Engagement scoping

Before any calculation:

1. Line of business — Life, health, P&C, annuity, reinsurance; direct vs assumed
2. Decision — Price change, reserve opinion, assumption update, product launch, regulatory filing
3. Data — Policy/claim bordereaux, triangles, census, experience periods, exclusions
4. Materiality — Volume, tail risk, new riders, or cohort changes driving review
5. Governance — Sign-off chain, model version, effective date, peer review requirements

See references/actuary_scope_and_principles.md.

2. Pricing and product design

1. Define coverage, limits, deductibles, and rating variables
2. Segment risks (territory, class, age band, hazard) with sufficient volume
3. Estimate frequency × severity or tabular costs; load for expenses, profit, and risk margin
4. Compare indicated vs current rates; document constraints (competitive, regulatory caps)
5. Stress key assumptions (loss trend, inflation, catastrophe load)
6. Summarize rate change and expected loss ratio / combined ratio impact

See references/pricing_and_product_design.md.

3. Reserving and loss development

1. Aggregate paid and incurred losses by accident year and development lag
2. Select development factors (chain ladder, BF, Cape Cod) with diagnostics
3. Estimate IBNR and total ultimate; separate case vs bulk reserves if needed
4. Reconcile to prior evaluation; explain changes (development, large losses, methodology)
5. Document tail selection and emergence patterns for long-tail lines

See references/reserving_and_loss_development.md.

4. Assumptions and experience studies

1. Define exposure base and study period; handle data quality and outliers
2. Compare actual vs expected (A/E) by key dimensions
3. Propose assumption updates with credibility (limited fluctuation, Bühlmann, or judgment)
4. Separate trend, level, and volatility where material
5. Version assumptions with effective dates and rationale for audit trail

See references/assumptions_experience_studies.md.

5. Capital and regulatory overview

1. Identify regime (NAIC RBC, Solvency II SCR, internal economic capital)
2. Map main risk drivers: underwriting, market, credit, operational (high level)
3. Relate reserves and pricing to solvency metrics—not a substitute for appointed actuary sign-off
4. Flag disclosure topics (IFRS 17 CSM, risk adjustment, LIC) for coordination with ifrs
5. Escalate legal or filing interpretation to counsel and appointed actuary

See references/capital_risk_and_regulatory_overview.md.

6. Model governance and deliverables

1. Inventory models (pricing, reserving, ALM); owner and validation status
2. Document inputs, methods, outputs, and limitations
3. Run sensitivity and reasonability checks; retain reproducible workpapers
4. Produce actuarial memo or exhibit: executive summary, exhibits, assumptions appendix
5. Archive versioned data cuts and sign-offs per model risk policy

See references/model_governance_and_deliverables.md.

Key metrics (insurance)

Metric	Typical formula / note
Earned premium	Written premium adjusted for unearned; match loss basis
Loss ratio (LR)	Incurred losses ÷ earned premium
Expense ratio	Underwriting expense ÷ earned (or written, per policy)
Combined ratio	Loss ratio + expense ratio; < 100% underwriting profit before investment income
Frequency	Claims ÷ exposure (policies, car-years, member months)
Severity	Average loss per claim
Pure premium	Expected loss cost per unit exposure
IBNR	Ultimate losses − reported incurred (definition varies by basis)
Prior-year development	Change in estimate of past accident years’ ultimates
Credibility Z	Weight on observed experience in assumption update

Clarify numerator/denominator conventions in every exhibit footnote.

Line-of-business notes

P&C

• Ratemaking on exposure (payroll, sales, vehicles) with class plans and territory
• Long-tail lines need tail factors and paid/incurred reconciliation
• Catastrophe loads separate from attritional; event years flagged in triangles

Life

• Mortality, lapse, and expense drive profit testing and reserves
• Cash-value products need interest and crediting assumptions coordinated with ALM
• Select vs ultimate periods for recently underwritten cohorts

Health

• Morbidity trend split utilization vs unit cost when data allows
• Seasonality and benefit design changes (deductible, network) dominate A/E
• Risk adjustment and pooling (ACA, large group) affect segment homogeneity

Annuity

• Longevity and withdrawal drive guarantee costs; scenario sets for sensitivities
• Hedge effectiveness is investment-led; actuary supplies liability cash-flow shapes

Data requests (starter checklist)

When the user has not supplied data, ask for:

1. Valuation date and reporting basis (statutory, GAAP, IFRS 17)
2. Triangle or bordereaux with field definitions (accident date, paid, case, count)
3. Exposure definition and earning pattern
4. Reinsurance structure (quota share, excess, aggregates) and netting rules
5. Large loss and catastrophe treatment in prior studies
6. Prior actuarial memo, approved assumptions, and model version

Reasonability and peer review

Before sign-off, complete:

• Triangle diagnostics (stability, tail, calendar-year check)
• Implied ultimate LR vs pricing and plan
• Bridge of reserve change to prior quarter (volume, PYD, method)
• Assumption changes tied to experience study with credibility
• Sensitivities on top 3 drivers documented
• Independent reviewer for material models (per tiering policy)

Deliverable standards

Deliverable	Minimum content
Pricing indication	Method, segments, indicated change, key assumptions, sensitivities
Reserve analysis	Triangle exhibits, factor picks, ultimates, IBNR bridge to prior
Experience study	A/E tables, credibility, recommended assumption changes
Assumption paper	Prior vs proposed, data period, governance approvals
Regulatory outline	Standard mapping (overview), open questions for appointed actuary
Board / risk summary	Tail scenarios, capital sensitivity qualitatively, model risk items

Always state uncertainty: ranges, sensitivities, and data limitations. Do not present model output as legal, regulatory, or statutory filing without qualified human review.

Ethics and reliance

• Disclose conflicts when advising both pricing and reserving on the same block without review
• Cite data limitations and one-time events affecting experience
• Distinguish indication (technical) from implemented rate (commercial constraints)
• Refer legal interpretations of policy language or filing requirements to commercial-counsel
• Coordinate IFRS 17 measurement presentation with ifrs; actuary owns cash-flow assumptions, not note legal wording

When to load references

• Scope, principles, ethics → references/actuary_scope_and_principles.md
• Pricing and product → references/pricing_and_product_design.md
• Reserving and triangles → references/reserving_and_loss_development.md
• Assumptions and experience → references/assumptions_experience_studies.md
• Capital and regulation (overview) → references/capital_risk_and_regulatory_overview.md
• Governance and memos → references/model_governance_and_deliverables.md