Mixed Deck — All CAS Topics Flashcards

What does IBNR stand for in actuarial reserving?

Answer: Incurred But Not Reported

IBNR (Incurred But Not Reported) reserves cover losses that have occurred but have not yet been reported to the insurer.

What is the primary goal of a quality improvement program?

Answer: To continuously enhance processes and outcomes

Quality improvement focuses on systematic enhancement of processes, services, and outcomes for continuous betterment.

Which communication technique is most effective for verifying understanding?

Answer: Asking the person to explain the information back in their own words

The teach-back method confirms understanding by having the person explain the information in their own words.

Climate change research in the CAS context most directly impacts which actuarial function?

Answer: Catastrophe model calibration and long-term trend assumptions

Climate change alters frequency and severity trends for natural perils, requiring actuaries to update catastrophe model assumptions and long-term projections.

The CAS Institute's Certified Specialist in Predictive Analytics (CSPA) credential is specifically designed for professionals who:

Answer: Apply advanced analytics in insurance without the full CAS fellowship track

The CSPA is a standalone credential for analysts and data scientists applying predictive modeling in insurance who may not be pursuing the full CAS fellowship.

What is the 'loss development factor' (LDF) used for in casualty actuarial work?

Answer: To project reported or paid losses at an interim age to their ultimate settled value

Loss development factors (also called age-to-age factors) are derived from historical loss triangles and applied to immature losses to estimate ultimate claim costs.

The CAS research area of 'resilience modeling' for catastrophe risk focuses primarily on:

Answer: Quantifying post-disaster recovery trajectories and their impact on insured losses

Resilience modeling examines how quickly communities and economies recover after catastrophes, which directly affects loss development and business interruption claims.

Under the CAS syllabus, what does 'loss sensitive business' refer to in financial analysis?

Answer: Business where the final premium or profit commission adjusts based on actual loss experience

Loss sensitive plans, such as retrospective rating, large deductible policies, and profit-sharing arrangements, tie premium or compensation to actual loss outcomes.

Which statistical distribution is commonly used to model the number of claims in an insurance portfolio due to its flexibility with the mean-variance relationship?

Answer: Negative binomial distribution

The negative binomial distribution is widely used for claim counts because it allows the variance to exceed the mean, capturing overdispersion common in insurance data.

Which of the following is an example of a 'conflict of interest' that must be disclosed under the CAS Code of Professional Conduct?

Answer: Holding a financial interest in a company whose reserves you are certifying

A financial interest in an entity whose actuarial work you are performing creates a conflict of interest that must be disclosed to the principal under Precept 7.

ASOP No. 25 (Credibility Procedures) applies when an actuary uses credibility theory. Which of the following is a key requirement of that standard?

Answer: The actuary must select credibility procedures appropriate for the purpose and disclose any limitations

ASOP No. 25 requires selecting a credibility procedure appropriate to the purpose and disclosing significant limitations of the approach.

Which reinsurance pricing method calculates the reinsurer's expected loss cost based on historical loss experience adjusted for trend and development?

Answer: Experience rating (burning cost method)

The burning cost (experience rating) method prices reinsurance by analyzing historical losses that exceeded the retention, trended and developed to current levels, to estimate future reinsurer costs.

What is a loss development factor (LDF)?

Answer: A ratio used to project losses from one development period to the next

LDFs (age-to-age factors) are ratios derived from historical triangles that project cumulative losses from one evaluation period to a later period.

In actuarial ratemaking, what does 'on-leveling' premium data accomplish?

Answer: Adjusting historical premium to reflect what it would have been at current rate levels

On-leveling (or bringing premiums to current level) ensures historical premiums are comparable to current rates before computing historical loss ratios.

What is the primary purpose of the Actuarial Board for Counseling and Discipline (ABCD)?

Answer: To investigate complaints and counsel actuaries on professional conduct

The ABCD investigates complaints against actuaries, provides counseling on ethical issues, and may recommend discipline for violations of the Code.

Which of the following exam changes must CAS announce to candidates at least how many days before the exam sitting to comply with its own policies?

Answer: At least 6 months

CAS policy requires that syllabus changes affecting an upcoming exam be announced at least six months prior to that exam sitting.

When presenting reserve estimates to a non-technical board of directors, an actuary should primarily focus on:

Answer: The range of reasonable estimates and key assumptions driving uncertainty

Non-technical audiences need context around uncertainty and key drivers, not mathematical detail.

Under the NAIC's Insurance Holding Company System Regulatory Act, what is the purpose of requiring prior approval for 'extraordinary dividends' from insurance subsidiaries?

Answer: To protect insurer solvency by preventing excessive capital extraction from regulated entities

Prior approval of extraordinary dividends prevents holding companies from draining capital from regulated insurance subsidiaries in ways that could impair their ability to pay claims.

An actuary retires from practice but is later found to have committed a serious ethical violation while active. Can the CAS still pursue disciplinary action?

Answer: Yes, the CAS can pursue action against former members for violations committed during membership

Professional disciplinary processes can be pursued against former members for conduct that occurred during active membership, regardless of subsequent retirement.

In the context of actuarial operations, what does 'cycle time' refer to?

Answer: The total elapsed time from process start to completion

Cycle time measures the total elapsed time from when a process begins until it is completed, including all wait times and processing times.