Assumption Setting and Analysis

Describe the principles for setting best-estimate assumptions for actuarial work.

Explain the difference between best-estimate, prudent, and optimistic assumptions and their uses.

Describe the sources of data for setting assumptions (e.g., industry tables, population data, company experience).

Explain the methods for deriving mortality and morbidity assumptions from experience data, including allowance for future trends.

Explain how to set and maintain expense assumptions, including an allowance for inflation.

Describe the role of margins for adverse deviation (MADS) in assumptions for different purposes.

Explain the process of monitoring experience against assumptions and the resulting feedback loop.