Actuarial Principles and Their Applications

The second course of the Association's actuarial programme: how actuarial methods are applied in the real work of an insurance company. The course takes the learner from interest theory and the valuation of annuities to product development, reserves, capital and profit testing, and then on to general, group and health insurance, reinsurance, pension schemes, insurance economics and investment management.

Course programme

1. Practical application of interest theory — the yield curve, real and nominal rates, net present value and internal rate of return.
2. Actuarial valuation of life annuities — indexation, guaranteed period, longevity risk, model points.
3. Life insurance product development and underwriting fundamentals — gross premium, loadings, risk classes, anti-selection.
4. Reserves and minimum capital in life insurance — prospective reserve, Thiele's recursion, approaches to capital requirements.
5. Life insurance profitability analysis — profit projection, new business strain, sensitivity.
6. General insurance: products, rates and reserves — gross rate, unearned premium reserve, claims reserves.
7. Group life and disability insurance — experience rating of the group, profit sharing, credibility.
8. Health insurance: fundamentals of actuarial valuation — per member per month cost, trend, deductible and co-payment.
9. Reinsurance — quota share, surplus, excess of loss, stop loss, layer pricing.
10. Pension schemes and social security — funding, projected unit credit method, demographic burden.
11. Insurance economics — utility and the risk premium, anti-selection and moral hazard, the underwriting cycle.
12. Fundamentals of investment management — portfolio return and risk, diversification, asset-liability matching.

Each lesson comes with notes containing a table of notation, a worked example and practice problems, plus a lesson test. The course final test consists of 60 tasks, including problems based on common data sets; ASAB certificate.

Duration: 12 video lessons, 3 h 1 min of video + lesson tests and a final test.