An accurate measure of the change in the price of medical-scheme cover over time is necessary to inform health and social-security policy, and would provide consumers, employers and the regulator with a useful benchmark. A medical-scheme contribution index based on gross contributions to open medical schemes is constructed using the Paasche formula and a sample of schemes for the period 2006 to 2010. The results of the index indicate a 17,48% increase in real contributions over the period.
{"title":"The construction of a price index for contributions to South African open medical schemes","authors":"By S Ramjee, A. Kooverjee, KA Dreyer","doi":"10.4314/SAAJ.V13I1.1","DOIUrl":"https://doi.org/10.4314/SAAJ.V13I1.1","url":null,"abstract":"An accurate measure of the change in the price of medical-scheme cover over time is necessary to inform health and social-security policy, and would provide consumers, employers and the regulator with a useful benchmark. A medical-scheme contribution index based on gross contributions to open medical schemes is constructed using the Paasche formula and a sample of schemes for the period 2006 to 2010. The results of the index indicate a 17,48% increase in real contributions over the period.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612188","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The field of actuarial science has seen many changes over the past few years. We live in a world whose complexity becomes more apparent every day. From the well-known, such as natural catastrophes, to the esoteric, such as satellite launch coverage or cyberterrorism, actuaries are called upon more often to provide their principals with reasonable estimates of potential profit and loss exposure. The main tool of the actuary in all these cases is the ability to create a mathematical model of real-world events and, knowing the model's limitations, to use the model to develop a range of reasonable estimates of results. In this light, it is a welcome event to have a new text on the basics of risk modelling for general insurance. The text is structured so that each section adds more complexity and utility to the one before, and each is followed by a set of questions. There are six expository sections, a seventh section containing case studies that tie the subjects taught throughout the book together. The book concludes with two appendices - one discussing utility theory and Jensen's inequality, the other containing answers to selected questions.
{"title":"Risk Modelling in General Insurance: From Principles to Practice, Roger J. Gray and Susan M. Pitts : book review","authors":"Avraham Adler","doi":"10.4314/SAAJ.V13I1.8","DOIUrl":"https://doi.org/10.4314/SAAJ.V13I1.8","url":null,"abstract":"The field of actuarial science has seen many changes over the past few years. We live in a world whose complexity becomes more apparent every day. From the well-known, such as natural catastrophes, to the esoteric, such as satellite launch coverage or cyberterrorism, actuaries are called upon more often to provide their principals with reasonable estimates of potential profit and loss exposure. The main tool of the actuary in all these cases is the ability to create a mathematical model of real-world events and, knowing the model's limitations, to use the model to develop a range of reasonable estimates of results. In this light, it is a welcome event to have a new text on the basics of risk modelling for general insurance. The text is structured so that each section adds more complexity and utility to the one before, and each is followed by a set of questions. There are six expository sections, a seventh section containing case studies that tie the subjects taught throughout the book together. The book concludes with two appendices - one discussing utility theory and Jensen's inequality, the other containing answers to selected questions.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612149","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Like its European counterparts, the South African insurance industry is moving towards its own risk-based regulatory regime, Solvency Assessment and Management (SAM). As a result greater focus is being placed on the appreciation of risks facing firms, of which operational risk forms a significant part. This paper aims to review operational risks as they pertain to South African insurers, both in internal risk-management practices and for the purposes of regulatory compliance. It presents principles and initiatives that have the potential to assist insurers in their identification and management of operational risks. A framework for the management of operational risk is discussed, as is the use of operational-loss data in this framework. Through an industry survey, this paper assesses perceptions towards operational risk, as well as views on the SAM regulations for the calculation of operational risk capital. Furthermore, high-level feasibility of an industry-wide operational-risk consortium database is studied.
{"title":"Operational risk management: practical implications for the South African insurance industry","authors":"M. Martín, M. Hayes","doi":"10.4314/SAAJ.V13I1.3","DOIUrl":"https://doi.org/10.4314/SAAJ.V13I1.3","url":null,"abstract":"Like its European counterparts, the South African insurance industry is moving towards its own risk-based regulatory regime, Solvency Assessment and Management (SAM). As a result greater focus is being placed on the appreciation of risks facing firms, of which operational risk forms a significant part. This paper aims to review operational risks as they pertain to South African insurers, both in internal risk-management practices and for the purposes of regulatory compliance. It presents principles and initiatives that have the potential to assist insurers in their identification and management of operational risks. A framework for the management of operational risk is discussed, as is the use of operational-loss data in this framework. Through an industry survey, this paper assesses perceptions towards operational risk, as well as views on the SAM regulations for the calculation of operational risk capital. Furthermore, high-level feasibility of an industry-wide operational-risk consortium database is studied.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612257","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The globalisation of the financial services industry and the increasing complexity of insurance products, among other factors, have led to the development of new regulatory systems for insurers globally (and, in particular, in South Africa). The primary intention of these systems is to protect the interests of policyholders by ensuring that insurance companies remain solvent in most foreseeable circumstances. In South Africa, new regulation, known as Solvency Assessment and Management (SAM), is expected in 2015, but this regulation is to apply only to insurance companies and not to medical schemes. This paper considers the implications of the application of capital requirements under Quantitative Impact Study 1 to the measurement of capital adequacy in South African medical schemes. Data from 2006, 2007 and 2008 were used to parameterise the non-SLT health-underwriting risk module (i.e. the risk module relating to health-underwriting risk that is not similar to life techniques), which was then used to determine the level of economic capital that schemes would have been required to hold in 2009. The results showed an overall reduction in the capital requirements of medical schemes, as compared with the current statutory minimum requirements, and therefore an increase in the proportion of medical schemes that are found to be solvent.
{"title":"The effect of SAM on the South African medical-scheme environment : a quantitative analysis","authors":"M. Ganz","doi":"10.4314/SAAJ.V12I1.3","DOIUrl":"https://doi.org/10.4314/SAAJ.V12I1.3","url":null,"abstract":"The globalisation of the financial services industry and the increasing complexity of insurance products, among other factors, have led to the development of new regulatory systems for insurers globally (and, in particular, in South Africa). The primary intention of these systems is to protect the interests of policyholders by ensuring that insurance companies remain solvent in most foreseeable circumstances. In South Africa, new regulation, known as Solvency Assessment and Management (SAM), is expected in 2015, but this regulation is to apply only to insurance companies and not to medical schemes. This paper considers the implications of the application of capital requirements under Quantitative Impact Study 1 to the measurement of capital adequacy in South African medical schemes. Data from 2006, 2007 and 2008 were used to parameterise the non-SLT health-underwriting risk module (i.e. the risk module relating to health-underwriting risk that is not similar to life techniques), which was then used to determine the level of economic capital that schemes would have been required to hold in 2009. The results showed an overall reduction in the capital requirements of medical schemes, as compared with the current statutory minimum requirements, and therefore an increase in the proportion of medical schemes that are found to be solvent.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper presents the results of an investigation into whether age or work status are statistically significant determinants of the change in the consumption rate at and in retirement. This research used data from the Income and Expenditure Survey 2005-2006 for households comprising one or two adults. It was found that gifting and non-healthcare consumption, which includes gifting, are not influenced by age or work status. Certain households were found to have higher healthcare consumption after retirement than before retirement. This result challenges the belief that retired households have lower consumption than working households, all other things equal, and may therefore necessitate an upward adjustment to retirement adequacy goals.
{"title":"Consumption changes on retirement for South African households","authors":"M. Butler, Cjj van Zyl","doi":"10.4314/SAAJ.V12I1.1","DOIUrl":"https://doi.org/10.4314/SAAJ.V12I1.1","url":null,"abstract":"This paper presents the results of an investigation into whether age or work status are statistically significant determinants of the change in the consumption rate at and in retirement. This research used data from the Income and Expenditure Survey 2005-2006 for households comprising one or two adults. It was found that gifting and non-healthcare consumption, which includes gifting, are not influenced by age or work status. Certain households were found to have higher healthcare consumption after retirement than before retirement. This result challenges the belief that retired households have lower consumption than working households, all other things equal, and may therefore necessitate an upward adjustment to retirement adequacy goals.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612432","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite the importance of retirement adequacy goals to public policy, retirement fund design and personal financial planning, there has been little formal research on the estimation of retirement adequacy goals for South African households. This research derived estimated retirement adequacy goals for employed one- and two-adult households. A consumption-smoothing model with a minimum-income underpin was developed to estimate wealth-earnings ratio goals using data from the Income and Expenditure Survey 2005-2006. Household wealth-earnings ratio goals were estimated to be between 10,5 and 18,2 times annual salary depending on retirement age, household composition, income, location, age, education, household income distribution, home ownership and salary support. Considering current retirement savings rates, retirement before age 67 is unlikely to be affordable for most households.
{"title":"Retirement adequacy goals for South African households","authors":"M. Butler, C. V. Zyl","doi":"10.4314/SAAJ.V12I1.2","DOIUrl":"https://doi.org/10.4314/SAAJ.V12I1.2","url":null,"abstract":"Despite the importance of retirement adequacy goals to public policy, retirement fund design and personal financial planning, there has been little formal research on the estimation of retirement adequacy goals for South African households. This research derived estimated retirement adequacy goals for employed one- and two-adult households. A consumption-smoothing model with a minimum-income underpin was developed to estimate wealth-earnings ratio goals using data from the Income and Expenditure Survey 2005-2006. Household wealth-earnings ratio goals were estimated to be between 10,5 and 18,2 times annual salary depending on retirement age, household composition, income, location, age, education, household income distribution, home ownership and salary support. Considering current retirement savings rates, retirement before age 67 is unlikely to be affordable for most households.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612120","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Access to healthcare is considered to be a basic human right. This paper explores the concept of access to public healthcare, with a particular focus on affordability, accessibility and accommodation. Furthermore, it highlights certain issues around the concept of access in the South African setting, by analysing the results from the General Household Surveys (2002-2009). Affordability of healthcare services and the positioning of the facilities were not identified as being key barriers to access. Instead, other aspects, such as accommodation to the patients' needs and acceptability of services received had greater significance and should be prioritised in terms of any proposed healthcare reforms.
{"title":"Access to public healthcare in South Africa","authors":"S. Plaks, M. Butler","doi":"10.4314/SAAJ.V12I1.5","DOIUrl":"https://doi.org/10.4314/SAAJ.V12I1.5","url":null,"abstract":"Access to healthcare is considered to be a basic human right. This paper explores the concept of access to public healthcare, with a particular focus on affordability, accessibility and accommodation. Furthermore, it highlights certain issues around the concept of access in the South African setting, by analysing the results from the General Household Surveys (2002-2009). Affordability of healthcare services and the positioning of the facilities were not identified as being key barriers to access. Instead, other aspects, such as accommodation to the patients' needs and acceptability of services received had greater significance and should be prioritised in terms of any proposed healthcare reforms.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612175","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper the actuarial assessment of damages for personal injury and death is discussed in the context of South African law. The legal framework imposes a variety of calculation rules that need to be born in mind if an actuary is to produce a quality product. This framework changes with the passage of time. The purpose of the paper is to summarise the current state of affairs and highlight issues deserving of further actuarial discussion.
{"title":"Damages for personal injury and death : legal aspects relevant to actuarial assessments : refereed paper","authors":"R. Koch","doi":"10.4314/SAAJ.V11I1.4","DOIUrl":"https://doi.org/10.4314/SAAJ.V11I1.4","url":null,"abstract":"In this paper the actuarial assessment of damages for personal injury and death is discussed in the context of South African law. The legal framework imposes a variety of calculation rules that need to be born in mind if an actuary is to produce a quality product. This framework changes with the passage of time. The purpose of the paper is to summarise the current state of affairs and highlight issues deserving of further actuarial discussion.","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2011-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper applies a quality framework theory to a field of actuarial practice. The paper is relevant to the professionalism of actuaries in general, and to those who assess the quantum of damages in particular. Quality framework theories propose that practitioners need to apply a range of technical and normative capabilities to provide a quality professional service. This paper suggests the various capabilities that are needed by actuaries in the field of assessment of the quantum of damages, and orders them by applying a quality framework. A methodology for practitioners to benchmark the quality of their practice is outlined. In South Africa, there is no formal curriculum, canon, or specific guidance for actuaries practising in this field. The paper therefore also contributes to the professionalisation of the field by reviewing and recording relevant literature, and provisionally filling gaps in it from personal experience of the author as practitioner in this field. The paper concludes by suggesting that this approach could also help professionalise other fields of actuarial practice. Keywords: Professionalism; professionalisation; professional practice; actuarial quality framework; assessment of quantum of damages; loss of support; loss of earnings
{"title":"Promoting quality in the actuarial assessment of quantum of damages in South Africa : refereed paper","authors":"M. Lowther","doi":"10.4314/SAAJ.V11I1.3","DOIUrl":"https://doi.org/10.4314/SAAJ.V11I1.3","url":null,"abstract":"This paper applies a quality framework theory to a field of actuarial practice. The paper is relevant to the professionalism of actuaries in general, and to those who assess the quantum of damages in particular. Quality framework theories propose that practitioners need to apply a range of technical and normative capabilities to provide a quality professional service. This paper suggests the various capabilities that are needed by actuaries in the field of assessment of the quantum of damages, and orders them by applying a quality framework. A methodology for practitioners to benchmark the quality of their practice is outlined. In South Africa, there is no formal curriculum, canon, or specific guidance for actuaries practising in this field. The paper therefore also contributes to the professionalisation of the field by reviewing and recording relevant literature, and provisionally filling gaps in it from personal experience of the author as practitioner in this field. The paper concludes by suggesting that this approach could also help professionalise other fields of actuarial practice. Keywords: Professionalism; professionalisation; professional practice; actuarial quality framework; assessment of quantum of damages; loss of support; loss of earnings","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2011-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70612555","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Book review: Stress Testing for Financial Institutions","authors":"M. Schouten","doi":"10.4314/SAAJ.V9I1.46820","DOIUrl":"https://doi.org/10.4314/SAAJ.V9I1.46820","url":null,"abstract":"Stress Testing for Financial Institutions Edited by D Rosch and H Scheule. Risk Books, London, 2008 (457 pages)","PeriodicalId":40732,"journal":{"name":"South African Actuarial Journal","volume":null,"pages":null},"PeriodicalIF":0.2,"publicationDate":"2009-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70614580","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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