Skip to content

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

An Indian health insurer plans to reuse a claims dataset collected by a third-party administrator for a new pricing analysis. Before using it, which step is most consistent with good data analysis practice?

The insurer should check the data for completeness, accuracy and suitability for the new pricing purpose, and record any limitations. Data collected by others for a different aim cannot simply be assumed reliable, and records should not be dropped or altered just to suit a chosen model.

  1. AAssume the data are accurate because a reputable administrator supplied them
  2. BCheck the data for completeness, accuracy and suitability for the new purpose, and note any limitationsCorrect
  3. CDelete all records containing any missing value without further consideration
  4. DUse only the most recent month of data to keep the analysis simple
  5. Choose the model first and adjust the data to suit it

Explanation

Secondary data were collected for another purpose, so their quality and fit for the new aim must be checked, with limitations documented. Blindly trusting the data, deleting records without thought or fitting data to the model are poor practice.

Did you get it right without looking?

One question tells you little. A timed set on Purpose and function of data analysis shows your real accuracy, how long you take and where you lose marks.

Practise Purpose and function of data analysisFree diagnostic mock

More Purpose and function of data analysis questions