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IAI Actuarial Core Principles · Actuarial Statistics · Purpose and function of data analysis

A life insurer in Mumbai has policyholder data and wants to estimate lapse rates for a new product from a sample of 2,000 policies and then say how reliable the estimate is for the whole portfolio. Which aim of data analysis does this most directly represent?

This is inferential analysis. The insurer uses a sample of 2,000 policies to draw conclusions about the whole portfolio and to assess the reliability of the estimate. That goes beyond describing the sample, and it is not individual-level prediction or data preparation.

  1. AInferential analysis, drawing conclusions about a population from a sampleCorrect
  2. BDescriptive analysis, summarising the sample only
  3. CPredictive analysis, forecasting individual policy lapses
  4. DData cleaning, removing errors before any work
  5. Data collection, designing the sampling frame

Explanation

Using a sample of 2,000 policies to estimate a portfolio lapse rate and quantify its reliability is statistical inference. A purely descriptive summary would stop at the sample, and the question concerns neither forecasting individual lapses nor cleaning or collecting data.

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