Transcript Course on Professionalism - Casualty Actuarial Society

Course on Professionalism
ASOP #23 – Data Quality
Purpose
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Give guidance in:
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Selecting data
Relying on data supplied by others
Reviewing data
Using Data
Disclosures with regard to data quality
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Scope
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Applies to all areas of practice
Does NOT require audit of data
If standard establishes requirements in addition
to those imposed by law, satisfy both
Originally effective 12/31/1993; updated effective
for work products for which data was provided on or after
May 1, 2005 or projects started on or after July 1, 2006
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Question 1
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Which of the following statements are not true
regarding the scope of ASOP 23?
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A. Applies to Property & Casualty actuarial work
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B. Requires audit of data if known limitations in data
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C. Applies to Health Insurance actuarial work
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D. All of the above are true
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Overview
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Accuracy and validity of actuarial analyses are
dependent on the quality of data used
Expectations that actuaries will use appropriate
data in their work and will disclose material
imperfections in underlying data
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Issues and Recommended
Practices
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Completely accurate, appropriate, and comprehensive
data are rarely available
An actuary performs an analysis with available data and
sufficiently discloses material data limitations, and their
implications
Data review may not always reveal imperfections
This standard does not recommend that an actuary
audit data
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Selection of Data
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Understand intended use
Consider desired and possible alternative data
elements
Data considerations:
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Appropriate for intended purpose, including
whether sufficiently current
Reasonableness and comprehensiveness
Known, material limitations
Cost and feasibility of alternatives
Sampling methods, if used
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Review of Data
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Definition of “review” added, pointing out that
it is an informal examination of obvious
characteristics of the data
Applies whether the actuary prepared the data or
received data from a third party
Review for reasonableness and consistency,
“unless review is not necessary or is not
practical”
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Nature and Extent of Review
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Make reasonable effort to determine the
definition of each data element
Identify questionable data values with material
impact; consider attempts to improve data
Review of prior data
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Question 2
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With respect to selection of data, which
items should receive due consideration?
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A. Intended use
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B. Known, material limitations of data
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C. Cost and feasibility of alternatives
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D. All of the above
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Reliance on
Data Supplied by Others
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Accuracy and comprehension of data is
responsibility of the provider
Actuary may rely on data supplied by others but
should follow guidance under 3.5: review of
data first (new clarification)
Okay, unless material errors or unreliability
become apparent
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Use of Data
Professional judgment prior to use:
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Will use of imperfect data produce material bias
or highly uncertain results?
Is the data adequate to satisfy analysis purpose?
Can data be corrected or additional data
provided?
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Documentation/Disclosure
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Refer to guidance from ASOP 41: Actuarial Communications
Include in actuary’s report:
 Source(s) of data
 Whether or not data reviewed
 Materiality of biases due to imperfect data
 Adjustments or modifications made
 Extent of reliance on data supplied by others
 Limitations on use of work product
 Any unresolved concern about the data
 Conflicts with law or regulations
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Summary
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An actuarial analysis is based upon a thorough
review of data, along with practical knowledge
of the field of practice and training in actuarial
theory, …
The accuracy and validity of the actuarial
analysis are dependent on, among other things,
the quality of the data used
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Question 3
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Which of the following are true?
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A. The source of data should be disclosed
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B. Data with known limitations should not be used for
actuarial analysis
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C. Data provided by a third party source should be audited
prior to its use
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