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

A motor insurer analyses last year's claims file and reports that the mean claim was ₹18,400, the median was ₹11,200 and 8% of claims exceeded ₹60,000. Which type of analysis is this?

This is descriptive analysis. The mean, median and proportion of large claims simply summarise the data already observed, without generalising to a wider population or forecasting future claims, which would be needed for inferential or predictive analysis.

  1. ADescriptive analysisCorrect
  2. BInferential analysis
  3. CPredictive analysis
  4. DPrescriptive simulation
  5. Confirmatory hypothesis testing

Explanation

The figures only summarise the observed claims file using a mean, median and an exceedance proportion. No generalisation to a wider population and no forecasting of new cases is made, so this is descriptive analysis. Inferential analysis would require a sample-to-population statement such as a confidence interval.

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