Life Insurance and Health Insurance Actuarial Practice
This domain covers how Chinese life and health insurers price, reserve and report business. The exam probes the mechanics of the pricing bases (预定利率、预定发生率、预定费用率), three-source profit attribution, product rules for 分红险、万能险 and 投连险, and the regulatory constraints shaping health products - especially 重大疾病保险 and short-term medical business.
Pricing and profit sources
- Three pricing bases: interest, decrements (mortality or morbidity) and expenses. The pricing interest rate must not exceed the regulatory ceiling, which the 金融监管总局 adjusts periodically in line with the macro environment.
- 三差 analysis: 死差 (actual minus assumed mortality/morbidity), 利差 (actual minus assumed investment return) and 费差 (actual minus assumed expenses), signed so that positive is favourable.
- Participating business carries a capped illustrative dividend rate and a 分红特别储备 that smooths payouts across years.
Reserving and reporting
- 法定准备金: long-term business uses the net-premium method with valuation interest and valuation decrements plus a 准备金充足性测试; short-term business uses unearned premium and outstanding claim reserves.
- 偿二代 recognised liabilities use best-estimate plus a risk margin, which will not equal the statutory reserve - state which basis you are quoting.
- Under CAS 25 (2020 revision) the 剩余边际 (CSM) is released over coverage units, and premiums are no longer the revenue line.
Health-specific rules
- The 2020 重大疾病保险的疾病定义使用规范 mandates 28 重度疾病 plus 3 轻度疾病; 轻度疾病 payouts may not exceed 30% of the 重度疾病 sum assured.
- Short-term health business (银保监办发〔2021〕7号) bans misleading guarantee-of-renewal wording and requires loss-ratio disclosure.
- Long-term adjustable-rate medical products must specify trigger conditions, caps and minimum intervals between adjustments.
Worked example
Two-year term insurance, sum assured 1,000, q40 = 0.002, q41 = 0.003, i = 3%. Expected present value of benefits = 1,000 × [0.002/1.03 + (0.998)(0.003)/1.03²] = 1,000 × (0.0019417 + 0.0028218) = 4.7635. Annuity due = 1 + 0.998/1.03 = 1.96893. Net annual premium = 4.7635/1.96893 = 2.42 per 1,000 sum assured. Loading expenses as a percentage of premium plus a per-policy amount gives the gross premium; confirm the gross-premium reserve stays non-negative at every duration.
Traps that cost marks
- Sign errors in 三差 attribution.
- Reusing pricing assumptions for valuation without running the adequacy test.
- Treating the 30% 轻度疾病 cap as applying to the aggregate of all payouts rather than to the 重度疾病 sum assured.