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

A motor insurer in India reviews 5,000 claims paid last year and reports the mean claim size, the median, and a histogram of claim amounts. Which type of analysis is this?

This is descriptive analysis, because the insurer simply summarises existing claim data using the mean, median and a histogram. It does not generalise to a wider population with hypothesis tests or confidence intervals, nor does it forecast future claims.

  1. ADescriptive analysisCorrect
  2. BInferential analysis
  3. CPredictive analysis
  4. DPrescriptive analysis
  5. Causal experimental analysis

Explanation

The insurer is only summarising data it already holds, using averages and a histogram. No generalisation to a wider population and no forecast of future values is made. That is descriptive analysis. Inferential analysis would involve testing hypotheses or estimating population parameters with uncertainty.

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