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| | ==In Plain English!== | | ==In Plain English!== |
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| − | ===2019.Fall Updates=== | + | ===2020.Fall Updates=== |
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| − | {| class="wikitable" style='background-color: ;'
| + | As I mentioned above, if there's going to be a question directly from this reading, I think it would most likely be from the section on COVID19. |
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| − | | The '''November 2019 update''' for this reading ''(relevant for the 2020.Spring exam)'' has <strong><u>NOT</u></strong> had significant portions either <u>removed</u> or <u>changed</u>.
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| − | * The Loss Ratio Exhibit has been changed, but the main change seems to be the removal of the calculation of the '''discounted''' loss ratio. This calculation had issues and I'm not surprised it was eliminated. I wonder if they will reintroduce in a modified form at a later date?
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| − | * There did not appear to be any other changes relevant to studying for Exam 6.
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| − | ===2018.Fall Updates===
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| − | {| class="wikitable" style='background-color: gold;'
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| − | | The '''November 2018 update''' for this reading ''(relevant for the 2019.Spring exam)'' has had significant portions either <u>removed</u> or <u>changed</u>.
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| − | * Almost all of the material on IFRS 17 was removed. That means the exam question from 2018.Fall ''(discussed further down)'' should no longer be relevant for the 2019.Spring sitting. But, there will be a reading '''added''' for 2019.Fall <u>exclusively on IFRS 17</u> and how it compares to current CIA standards.
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| − | * Other than the IFRS 17 question from 2018.Fall, there has never been a question from this reading. It seems unlikely anything will be asked on 2019.Spring. I could be wrong, but if I were studying again for this exam, I would skip this reading entirely. Remember that there's no way you can learn everything from the 2,500 pages of material on the syllabus. You can completely miss 2 questions ''(2-4 points)'' and still pass the exam comfortably, '''provided''' you know the top 24 readings very, very well, and at least know the answers to old exam questions from the lower-ranked readings.
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| − | As mentioned in the summary, this reading concerns best practices for the appointed actuary when performing a valuation of reserves. Much of it is duplicated in other syllabus readings, so my suggestion is to scan the text for material that '''is not''' covered elsewhere. My advice is to spend minimal time on this reading, but if you don't want to skip it entirely, take a look at Section 9 on emerging issues:
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| − | * recent changes to MIG ''(Minor Injury Guidelines)'' in Alberta
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| − | * recent auto reforms in Ontario
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| − | These are items the AA should consider in their pricing and reserving work.
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| − | '''Just to reiterate''': This is an example of a reading that covers many topics but not in very much detail. Again, it isn't realistic to learn everything because it's been so lightly tested. My recommendation is that you take an educated guess as to what might be asked then learn those topics.
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| − | ===Section 7: IFRS 17===
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| − | {| class="wikitable" style="background-color: gold;"
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| − | | This material has been '''removed''' from this reading. I kept the explanation below because IFRS 17 is an important new topic but as of 2019.Fall, it has its own dedicated reading, ''[[CIA.IFRS17]]''. Note that the examiner's report answer may not be relevant anymore. You should base your study of IFRS 17 on the new reading.
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| − | |}
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| − | Here's the link with the official question & answer:
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| − | : [https://www.battleactsmain.ca/pdf/Exam_(2018_2-Fall)/(2018_2-Fall)_(28).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2018.Fall #28)'''</span>
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| − | And here's my version of the question & answer:
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| − | :{| class="wikitable"
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| − | | '''Question''': how will IFRS 17 affect the valuation of <u>actuarial liabilities</u> when it replaces IFRS 4 on January 1, 2021
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| − | :: The answer is in a bullet point list directly from the source reading. There are 5 points but each is quite long. What you and I have to do is condense each point down to a simple phrase. The model answer in examiner's report is much shorter than the explanation given in the reading. The '''first thing''' I did was write down 1 word that represents each bullet point:
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| − | ::* Aggregation
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| − | ::* Measurement
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| − | ::* Discounting
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| − | ::* Risk adjustment
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| − | ::* Reporting
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| − | :: '''Next''' you need a memory trick to for these 5 points. To do this, I <u>rearranged</u> these 5 points as shown below. The first letter of each point spells <span style="color: red;">'''DRAM-R'''</span>. ''(In my mind, I hear this as <u>drammer</u> which sounds a little like <u>drummer</u>. So what I commit to memory is <u>drummer</u>, then I can figure out the rest.)'' The '''last thing''' to do is write a phrase that explain each of these points <u>''concisely''</u>.
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| − | ::: <span style="color: red;">'''D</span>iscounting''':
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| − | :::: - use a yield curve instead of a single discount rate ''(and no more PfAD for interest/discount rate → risk adjustment for <u>financial risk</u> is implicitly included in yield curve)''
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| − | ::: <span style="color: red;">'''R</span>isk adjustment''':
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| − | :::: - adjust PV(future cash flows) for uncertainty in amount & timing related to <u>non-financial risk</u> ''(likely different from existing PfAD)''
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| − | ::: <span style="color: red;">'''A</span>ggregation''':
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| − | :::: - create portolios of similar risks that are managed together: ''onerous'' risks, ''non-onerous'' risks, ''remaining'' risks
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| − | ::: <span style="color: red;">'''M</span>easurement''':
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| − | :::: - may use PAA ''(Premium Allocation Approach)'' for measuring ''remaining'' liabilities ''(PAA is a simplified version of BBA, Building Block Approach, and can only be used under certain conditions)''
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| − | ::: <span style="color: red;">''' –'''</span>
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| − | ::: <span style="color: red;">'''R</span>eporting''':
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| − | :::: - carrying amounts for 4 groups must be shown separately in financial statements:
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| − | ::::* insurance contracts that are assets
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| − | ::::* insurance contracts that are liabilities
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| − | ::::* <u>re</u>insurance contracts that are assets
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| − | ::::* <u>re</u>insurance contracts that are liabilities
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| − | :: You needed to know 3 of these bullet points to answer #28 on the 2018.Fall exam. The accepted answers had less detail than in the source reading but I don't know if you'll need to know more than that for future exams. It's probably a good idea to at least glance at the actual reading.
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| − | ====Yield Curves====
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| − | Something that seems important in understanding the <span style="color: red;">'''D</span>iscounting''' point above is:
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| − | :{| class="wikitable"
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| − | | '''Question''': what is a <u>yield curve</u>
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| − | :* a <u>yield curve</u> is a '''function''' relating ''yield'' of fixed-interest securities '''to''' the length of time to maturity.
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| − | : In other words, the yield varies over the lifetime of the security. ''(Contrast this with using a single discount rate to calculate present value.)''
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| − | The source reading states that insurers have a lot of work to do to be in compliance, and that they should be reading by the end of 2019 even though the official implementation date for IFRS 17 isn't until Jan 1, 2021.
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| − | ===Section 9: Current or Emerging Issues===
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| − | The current or emerging issues change every time this reading is updated. I suppose that makes sense. But instead of me making new notes every time there's a change, I suggest you just take a quick look at that section of the reading. I do not think anything from this section will be asked, but if you have extra time to kill, it might make good bedtime reading. ''(And by good, I mean completely boring so that it will put you to sleep.)''
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| | ==BattleCodes== | | ==BattleCodes== |
Reading: “Educational Note: 2021 Guidance to the Appointed Actuary for Property and Casualty Insurers,” September 2021.
Authour: Canadian Institute of Actuaries
Forum
Pop Quiz
- From the DCAT reading, identify 7 common ripple effects, and 5 common management actions for adverse scenarios. (We'll refer to these in this article)
Study Tips
An older version of this wiki article has been archived under the name CIA.Valn2020.
This reading is updated every year because it highlights changes that have been made to other readings. For example, it mentions recent changes that were made to Financial Condition Testing but these were already discussed in detail in the wiki article CIA.FCT-1.
If you check the BattleTable below, you'll see that the only available exam problem from this reading covered IFRS 17, but that was when there were no other IFRS 17 readings on the syllabus. Now there are 6 IFRS 17 readings on the syllabus and everything you need to know is available from those.
BattleTable
| reference |
part (a) |
part (b) |
part (c) |
part (d)
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| E (2018.Fall #28)
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IFRS 17: 1
- actuarial liabilities
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- 1 This question is outdated because the IFRS 17 material from that reading has been removed from the syllabus. The IFRS 17 material is now covered in much more detail in CIA.IFRS17. Even though the new reading covers the above question, it does so in a different way. That means the answer in the examiner's report is probably not relevant anymore. You should base your study of IFRS 17 on the new reading, CIA.IFRS17.
In Plain English!
2020.Fall Updates
As I mentioned above, if there's going to be a question directly from this reading, I think it would most likely be from the section on COVID19.
BattleCodes
- Conceptual:
- Just make sure you understand that the actuary needs to be aware of specific events that may impact actuarial methodology.
- If you read through this wiki article, you'll be should be reasonably well-prepared (for a reasonable question! CAS exam questions are not always reasonable!)
- Final Words: There is only a low probability that a question from this reading will appear on the exam.
Full BattleQuiz You must be logged in or this will not work.
Forum
POP QUIZ ANSWERS
| higher LR (higher losses or operating costs) |
loss of ReIns |
post-event inflation |
forced sale or liquidation |
mix shift |
PH actions (PH = Policyholder) |
regulatory action
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- 5 common management actions:
| tighten U/W |
raise rates |
review reinsurance |
sell assets |
review mix (geography, limit,...)
|
CIA.Valn2020
