Preview Questions Actuary | Role Specific Skill

Question 1: How do you account for "Moral Hazard" in insurance pricing, and what statistical techniques are used to quantify its impact on premium levels?

Which action should you take?

Choose only one option

Moral hazard is irrelevant and should not be considered in pricing models

Moral hazard is addressed solely through deductibles and co-payments

Moral hazard refers to the tendency of insured individuals to take on more risk, and its impact is quantified using claim frequency and severity adjustments

Moral hazard only applies to commercial lines insurance, not personal lines

Question 2: Under the Insurance Act of 1939 in the US, what is the primary focus for insurance companies' financial reporting?

Which action should you take?

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Capital adequacy and solvency standards

Taxation of insurance products

Reserve requirements and liquidity

Insurance premiums setting and reporting

Question 3: In assessing the risk of a life insurance portfolio, what is the most important factor when estimating the reserves required for future claims?

Which action should you take?

Choose only one option

The current financial market trends and interest rates

The expected mortality rates and policyholder behavior

The assets held in the insurance company's portfolio

The total number of claims paid in previous years

Question 4: How do you use "Time-to-Event Analysis" in predicting insurance claim frequency, and what statistical methods are used for survival data in this context?

Which action should you take?

Choose only one option

Time-to-event analysis is used only in healthcare insurance, not for general claims

Time-to-event analysis can be replaced by linear regression models

Time-to-event analysis is irrelevant as insurance claims are random

Time-to-event analysis models the duration until an event (e.g., claim) occurs, using methods like Kaplan-Meier estimators and Cox regression models

Question 5: How does "Catastrophic Risk" modeling affect pricing for natural disaster coverage, and what advanced techniques are used to model these extreme events?

Which action should you take?

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Catastrophic risk models estimate the likelihood and impact of extreme events, and techniques like extreme value theory (EVT) and stochastic simulation are used

Catastrophic risk is irrelevant and should be ignored in pricing

Catastrophic risk models are unnecessary if the insurer has large reserves

Catastrophic risk modeling only applies to life insurance products

Question 6: What is the main purpose of a discounted cash flow (DCF) model in financial forecasting for actuarial work?

Which action should you take?

Choose only one option

To estimate the cost of capital

To adjust financial statements for inflation

To forecast future market conditions

To determine the present value of future cash flows