Question

What is "model" risk in mortality assumption setting?

a.

The risk associated with incorrect or inadequate data used to derive parameters

b.

The risk that the model used to estimate future mortality may contain errors or may not be appropriate

c.

The risk of random fluctuations in mortality experience not corresponding with the adopted model and parameters

d.

The risk of mortality being more adverse than assumed due to incorrect parameter selection

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).The risk that the model used to estimate future mortality may contain errors or may not be appropriate Explanation:"Model" risk in mortality assumption setting refers to the risk that the model used to estimate future mortality may contain errors or may not be appropriate.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is "model" risk in mortality assumption setting?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. How does parameter risk differ from model risk in mortality assumption setting?

View solution

Q. What contributes to parameter risk in mortality assumption setting?

View solution

Q. How does data risk relate to parameter risk in mortality assumption setting?

View solution

Q. What contributes to the "random fluctuations" risk in mortality assumption setting?

View solution

Q. Which type of insurance product would typically have the maximum financial impact of mortality risk?

View solution

Q. What are the main ways of controlling mortality risk in insurance?

View solution

Q. In an established insurance market, what factors contribute to low model and parameter risk?

View solution

Q. What represents a difficult-to-quantify risk in mortality assumption setting?

View solution

Q. What is the primary purpose of underwriting in the context of life insurance?

View solution

Q. What are the two main types of underwriting in life insurance?

View solution

Q. How does reinsurance help insurers manage risk?

View solution

Q. What risk is associated with reinsurance arrangements?

View solution

Q. How does underwriting policy influence mortality or morbidity assumptions in pricing?

View solution

Q. What is the primary purpose of mortality and morbidity rates in insurance?

View solution

Q. How is mortality rate defined?

View solution

Q. What does morbidity rate refer to?

View solution

Q. What are the key factors considered in choosing mortality or morbidity rates?

View solution

Q. What is the significance of adjusting standard table rates in insurance?

View solution

Q. What is the main objective of experience analysis in insurance?

View solution

Q. What is the importance of data quality in experience analysis?

View solution
View All MCQs on IC 92 Actuarial Aspects of Product Development

Recommended Subjects

Are you eager to expand your knowledge beyond IC 92 Actuarial Aspects of Product Development? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Cytogenetics

Delve into the genetic mysteries of chromosomes with our Cytogenetics category....

Data Interpretation

Master the art of data analysis and interpretation with our Data Interpretation...

Environmental Engineering

Explore the critical field of Environmental Engineering with our dedicated category....

Geotechnical Engineering

Dive into the world of Geotechnical Engineering with our dedicated category. Explore...

Professional Communication

Hone your communication skills with our Professional Communication category. Enhance...

Environment Management

Master the art of Environment Management with our specialized category. Explore...

Marketing and Marketing Management

Uncover the strategies and tactics of marketing with our Marketing and Marketing...

Railway Engineering

Embark on a journey through the world of railway systems with our Railway Engineering...

Enzyme Technology

Unlock the power of enzymes with our Enzyme Technology category. Explore enzyme...