Study-Unit Description

Study-Unit Description


CODE INS2090

 
TITLE Actuarial Discounting and Ratemaking

 
UM LEVEL 02 - Years 2, 3 in Modular Undergraduate Course

 
MQF LEVEL 5

 
ECTS CREDITS 4

 
DEPARTMENT Insurance and Risk Management

 
DESCRIPTION The study-unit will prepare students for further quantitative based study-units within the insurance major program. Students will be pricing the present and future value of different projects. This will be extended to calculating the actuarial present value of a risky project. Together with other techniques, this study-unit will focus on evaluating the net and gross premiums for insurance contracts.

Study-unit Aims:

The purpose of this study-unit is to introduce cashflow appraisal methods, actuarial discounting and the main techniques used in calculating net premiums.

The study-unit also aims to assist students in becoming able to use the skills gained during this study-unit. This will equip students to perform effectively in non-life insurance companies, insurance management companies, audit firms and regulators as well as provide them with the foundations required to follow further modules in insurance risk.

Learning Outcomes:

1. Knowledge & Understanding:

By the end of the study-unit the student will be able to:
- Justify why insurance services are purchased;
- Explain the classic forms of rate making;
- List down the main factors that affect the rate of policy; and
- Demonstrate knowledge of premium pricing.

2. Skills:

By the end of the study-unit the student will be able to:
- Use different appraisal methods to analyse different projects;
- Use actuarial discounting to determine best estimate reserves; and
- Use Markov chains to estimate the probability of future events.

Main Text/s and any supplementary readings:

- Bluhm, W (Ed.) (1996) Group Insurance. Winsted, Connecticut: ACTEX Publications.
- Brigham, E.F. & Houston, J.F. (2009). Fundamentals of financial management. Ohio: Cengage South-Western.
- Brown, R.L. and Gottlieb, L.R. (2001). Introduction to ratemaking and loss reserving for property and casualty insurance. Winsted, Connecticut: ACTEX Publications.
- Render, B., Stair, R.M. & Hanna, M. E. (2006) Quantitative Analysis for Management (9e). New Jersey, Upper Saddle River: Prentice-Hall.
- Sullivan, M. (2011). Finite Mathematics: An Applied Approach. New Jersey: John Wiley and Sons.

 
STUDY-UNIT TYPE Lect, Performance, Tutorial & Ind Online Learning

 
METHOD OF ASSESSMENT
Assessment Component/s Assessment Due Sept. Asst Session Weighting
Presentation SEM1 No 30%
Examination (1 Hour) SEM1 Yes 70%

 
LECTURER/S Ranier Andrew Buhagiar
Dominic Cortis (Co-ord.)
Antoine Vella

 

 
The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints.
Units not attracting a sufficient number of registrations may be withdrawn without notice.
It should be noted that all the information in the description above applies to study-units available during the academic year 2023/4. It may be subject to change in subsequent years.

https://www.um.edu.mt/course/studyunit