ACTUARIAL EXAM HUMOR
Actuarial humor? The actuarial exams are in a category of their own. Kirk Fleming was kind enough to share his collection of actuarial exam humor and to allow me to post it, although he is not the author. Others have also made contributions.
Real or fiction? You be the judge.
PRICING
Define "Accident Year". Note that you are not being asked to define "Accident Year Losses"; you will receive no credit for doing so.
The use of age, sex and marital status as rating variables in Private Passenger Automobile insurance has been widely criticized. These variables are being rejected by an increasing number of authorities, with other variables being suggested for use in place of them. Actuaries should regard this change as:
A. A welcome triumph of rationalism over bigotry and superstition.
B. A long overdue rejection of ageism and sexism.
C. A step toward the rosy future in which Enlightenment will conquer darkness, ignorance, and tooth-decay.
D. An expression of the Zeitgeist.
E. All of the above.
Is the word "data" singular or plural? There is some disagreement among the authors on this terribly interesting question. Resolve this profoundly important question, including in your answer evidence that you know at least a scrap of Latin. You may find it useful to draw parallels and contrasts with such words as "agenda", "maximum", and "premium".
You are an actuary at a company that has announced its intention to move its operations to a little-known region of an adjacent state. Actuarial personnel spend much time discussing the move, with a resulting upward trend in Home Office General Expenses. Would it be sound practice to load these increased General Expenses into Homeowners rates for Idaho? Private Passenger rates for the adjacent state? Countrywide Boiler and Machinery? Can they be recouped by raising prices on the coffee wagon? How should they be reported to ISO?
According to the NCCI rate manual, the coverage discussed is called:
A. worker's compensation
B. workers' compensation
C. Worker's Compensation
D. Workers' Compensation
E. None of the above.
Compare and contrast Hewitt's review of Mayerson's paper with Mayerson's review of Hewitt's paper.
How many entries would there be in a set of Table L's varying by state, entry ratio, risk size, accident limit, and hazard group?
A. According to Harwayne?
B. According to Skurnick?
Which of the following best summarizes Perryman's paper on Experience Rating?
A. z = (E + B) / (E + K)
B. 0 <= z <= 1 and dz/dE > 0
C. z = (A + K) / (E + K)
D. zzzzzz
(2 points - no partial credit) List and explain any eight rating factors which must be considered in reviewing Miscellaneous Bonds.
LOSS RESERVES AND FINANCIAL STATEMENTS
You are an actuary who has been called upon to testify at a hearing on the subject of "certifying casualty loss reserves".
A. Prove that only members of the CAS are competent to certify reserves.
B. Show that references by CPAs to the "Actuaries Full Employment Act" are snide and ungracious.
C. The following has been proposed as a model for the Statement of Reserve Certification. Discuss its merits and its shortcomings:
"Ain't no way this company's gonna go belly up."
The Financial Condition (EX4) Subcommittee Blanks Task Force met in early 1987.
A. Where was the meeting held?
B. How was the weather?
C. Did everyone have a nice time?
The candidate will recognize the following as a footnote from the IEE:
"To relate equitably expenses incurred to premiums, where pooling agreements or similar arrangements exist between companies within a group and where companies operate through pools and associations and each company particpates in the expenses on a basis of a fixed percentage, each company's direct premiums. for the purpose of this exhibit shall be adjusted to produce its participation in the aggregate direct premiums of the group and further adjusted by substituting for the actual direct premiums on business written through associations, the participation of the company in the aggregate direct premiums of all members of each such association."
A. The Committee on Remarkable Examples of Actuarial Prose wants to present the author of this passage with a good book on grammar, one that has a thorough treatment on run-on sentences, and one that has a strong section on the use of the comma. Give the title, author and publisher of one such book.
B. Memorize this passage, and then go to the front of the room and recite it to the exam proctor.
C. Set the passage to music, with separate scorings for tuba and tambourine. Stand at your desk and hum your composition to the other candidates. A nicely done soft-shoe routine will be eligible for extra credit.
The following symbols are among the footnote indicators that are used in the Annual Statement: a tic-tac-toe sign, a dagger, a double dagger, a dagger with a second horizontal line, lower case letters with parentheses, lower case letters without parentheses, and upper-case letters. For each of those symbols, name an exhibit or schedule where it is used.
Which of the following is/are true?
A. "Non-admitted assets" are assets the company is ashamed of owning, such as real estate used for rent-gouging.
B. "Gross Premiums" are premiums derived from rates that contain a provision for obscene profits.
You are an actuary at a company that recently transferred its operations to a new location. While preparing Schedule P of the annual statement, you discover that during the move a certain amount of data was misplaced, lost, forgotten, stolen, or heaved out. A thorough search turns up the following inventory of experience, upon which you are to base your estimate for Auto Liability for Accident Year 1980:
A. Tenants policies in Illinois (excluding Cook County), 1969-1974.
B. Motorcycle Physical Damage in Newfoundland, 1978.
C. Workers' Compensation for off-shore oil rigs, various locations, various years.
D. Earthquake, industrywide, countrywide, 1920-1977.
Briefly explain how you would adapt, modify, and adjust this data to provide a model for the problem at hand. How would you deal with IBNR? What provision would you make for reopened claims?
PART 11
Define the Universe and give three examples.
Explain the nature of matter. Include in your answer an evaluation of the impact of matter on the development of mathematics and science.
Describe the history of insurance from its origins to the present day, concentrating especially but not exclusively on its social, political, economic, religious, and philosophical impact on Europe, Asia, America and Africa. Be brief, concise and specific.
