Study Notes and Published References - Note CIA Education Note - INSURANCE AND ANNUITY ILLUSTRATIONS
Considerations
- professional responsibility of member to public - don't mislead
- familiarity w/ users and uses of sales illustrations - who are users and what is purpose
- determination of range of primary scenarios - ensure ranges are reasonable
- based on policies, practices adn expereince adn economic environment
- demonstrate reasonable sensitivity - pick an alternate scenario to demostrate sensitivity of policy to changes in experience
- documentation
Guidance
- historical results s/b adjusted for current factors
- ex Investment Income Tax, current tax law, current expense levels adn margins for profitability, compensation, etc
- historical results s/b adjsuted for unique/one-side factor
- impact of declining canadian $ on international inv yields
- temporary dividend enhancements
- co's intended management of product
- caveat that primary scenario is NOT prediction of results
- scenarios shoudl encompass all exp factory which might materially impact results
- caveat that alternate scenario is NOT worst case scenario
- info on variability of results
- also consider
- policy provisions
- company practice
- potential impact of illustration on PRE
- ease of implementation of new scenarios
- whether product is lapse-supported
- consistency between assumptions used in scenario
- consider product special features
- for par dividend scales, consider
- trends in inv returns
- compositoin of portfolio of assets
- investment adn div policies of co
- recent co experience on factors impacting div scale
- for UL consider
- guar credited rates
- LT avg of inv returns by major inv options
- availability and use of hedging fo rindex-linked inv options
- guar mort andtoehr charges
- int credited copared to cgross inv returns
- recent co experience which might impact spread
- for toher products
- recent adn anticipated experience in factors affecting results
Sources of Info
- co's valn report
- co's long range plan
- economic forcasts
- spot yield curves
- CIA economic statistics
- historical results as reported by organiztions such as S&P, Morgan Stanley, etc
-
Copyright © 2004 Steve Welander.
Permission is granted to copy, distribute and/or modify this document
under the terms of the GNU Free Documentation License, Version 1.2
or any later version published by the Free Software Foundation;
with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts.
A copy of the license is included in the section entitled
'GNU Free Documentation License'.