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IAI Actuarial Core Principles · Business Management · Using data, company functions, people skills, influence and clear communication

A health insurer in Pune wants to show its board how claim costs have changed over the last 36 months and whether there is a seasonal pattern. The analyst has monthly claim totals. Which presentation is most suitable for this purpose?

A line chart of monthly claim totals against time is best, because it shows both the trend and any seasonal pattern over the 36 months. The other options show shares, a different relationship, a single summary figure or an unrelated variable.

  1. AA pie chart of total claims for the 36 months split by year
  2. BA line chart of monthly claim totals plotted against timeCorrect
  3. CA scatter plot of claim size against policyholder age
  4. DA table of the average claim for the whole period
  5. A bar chart showing the number of policyholders by city

Explanation

Trends and seasonality are features of data over time, so a time-series line chart shows them directly. A pie chart hides the monthly pattern. A scatter of claim size and age shows a different relationship. A single average removes all time information.

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