Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > General Actuarial
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


General Actuarial Non-Specific Actuarial Topics - Before posting a thread, please browse over our other sections to see if there is a better fit, such as Careers - Employment, Actuarial Science Universities Forum or any of our other 100+ forums.

Reply
 
Thread Tools Search this Thread Display Modes
  #1  
Old 10-24-2001, 10:54 AM
glenn
Guest
 
Posts: n/a
Default

Is anybody using Monte Carlo simulation in conjunction with illustrations (or making this available to agents?) -or have any thoughts on this?
Reply With Quote
  #2  
Old 10-24-2001, 01:36 PM
Double High C's Avatar
Double High C Double High C is offline
Site Supporter
Site Supporter
SOA AAA
 
Join Date: Sep 2001
Location: atop the 5th line above the staff
Posts: 11,465
Default

Bad ideer.

Meaning of parameters (particularly volatility), etc. would not be clearly understood by / communicated to prospective buyers. It would give a false sense of accuracy, too.

Also, it implies that the company has determined what it would do in any one of those scenarios. Of course, this is nonsense, and would open up the company to lawsuits (and I would vigorously defend the buyers, if I had a JD, of course).
Reply With Quote
  #3  
Old 10-24-2001, 01:42 PM
urysohn
Guest
 
Posts: n/a
Default

Sounds nasty for all kinds of reasons. Some agents have enough problems understanding even static life illustrations, let alone dynamic ones. You get a different result each time you run it -- close, but still different. Lawsuits are almost guaranteed, assuming there are any applicants who aren't so confused by the projection that they walk away. Which items do you simulate, and how do you determine how they vary? Lawsuits, lawsuits, lawsuits -- you know they're going to happen one way or the other, but I'd expect a lot more of them with this process.
Reply With Quote
  #4  
Old 10-24-2001, 02:37 PM
glenn
Guest
 
Posts: n/a
Default

http://www.cch.ca/emonthly/finan/index.htm

They're suggesting it be used for investments, which sounds like a good thing (doesn't Monte Carlo do a whole bunch of 'what ifs'?). My initial reaction is that this is a good thing for the consumer - shows the impact of a wider variety of scenarios.

And if it's good for investments, then why not investments as part of a UL? Perhaps I am oversimplifying things.
Reply With Quote
  #5  
Old 10-24-2001, 03:06 PM
Double High C's Avatar
Double High C Double High C is offline
Site Supporter
Site Supporter
SOA AAA
 
Join Date: Sep 2001
Location: atop the 5th line above the staff
Posts: 11,465
Default


Quote:
On 2001-10-24 13:37, glenn wrote:
http://www.cch.ca/emonthly/finan/index.htm

They're suggesting it be used for investments, which sounds like a good thing (doesn't Monte Carlo do a whole bunch of 'what ifs'?). My initial reaction is that this is a good thing for the consumer - shows the impact of a wider variety of scenarios.

And if it's good for investments, then why not investments as part of a UL? Perhaps I am oversimplifying things.
You are simplifying things. I'm not sure if I know where to begin, but ...

I grant that it is not unreasonable (within limitations, in the proper context / time) to view stock market returns as random.

However, credited rates involve a great deal of discretion on the part of the company; furthermore, assuming that other components of the policy are nonguaranteed (e.g. COI charges), then the company has the ability to raise these rates in e.g. a scenario in which their investments perform well but all other elements of profitability suffer (or perhaps overall profitability is just not high enough for the new company management team in 10 years).
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 05:28 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.52157 seconds with 9 queries