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The actual claim paid at the time of settlement may be more, or less than the
reserve. This claim reserving is done for each and every claim on case-to-case
basis. Actuary's role in the reserving process is to estimate the IBNR claim
reserves and to estimate the expected additional payments on the claims, for
which the claims department has kept the reserves. They use the reporting
delay pattern and the claim settlement pattern to estimate these numbers.

Q12. Write a note on data and modeling.
Ans. All the types of analysis can be done accurately only if complete and accurate

data is captured an the company's database systems. For e.g, to understand that
which disease is causing the maximum claims for a company, it needs to capture
the disease details of each claim. There are two sets of data used by the actuaries:
(i) details of policies and the insured members and
(ii) details of the claims. There should also be a unique key used to link each

claim, and also to the member who gave rise to the claim.

Modeling process is used to analyse the data and develop a formula which can be
used to predict the future with as much accuracy as possible. These models are
simplistic formula to understand the complex real life situations. For e.g, using the
data model can predict the expected claim amount from a person of age 30 and
sum insured Rs. 200,000 in Mumbai. There are various kinds of actuarial models
available which helps actuaries in predicting the future behaviors by analyzing past
claims. A strong foundation of data is of course the pre-condition to sound actuarial
analysis and judgement.

202 Guide for Health Insurance