Iran Official Insurance Actuary Exam flashcards

31 cards. Read the term and the definition here. The deck at the top of this page is optional.

Law of total probability

For a partition of the sample space into disjoint events, the probability of an event equals the sum over the partition of the conditional probability given each part times that part's probability.

Compound variance formula

For aggregate loss S with independent frequency N and severity X, variance equals expected frequency times severity variance plus frequency variance times squared severity mean.

Neyman–Pearson lemma

For testing a simple null against a simple alternative, the most powerful test rejects the null for large values of the likelihood ratio of alternative to null densities.

Annuity-immediate formula

The present value of one unit paid at each year-end for n years equals (1 minus v to the n) divided by the effective interest rate i.

Modified duration

Macaulay duration divided by one plus the effective interest rate; it approximates the percentage price change for a small change in yield, with opposite sign.

Redington immunization

A portfolio is immunized when asset and liability present values and durations match at the valuation rate, and asset convexity exceeds liability convexity, protecting against small parallel shifts.

Insurance–annuity relation

For whole life insurance and a life annuity-due, the net single premium equals one minus the discount factor d times the annuity value, where d equals i over one plus i.

Prospective reserve

The reserve at duration t equals the net single premium for the remaining benefits minus the net premium times the annuity-due value for future premiums.

Multiple decrement rate

The probability of exit due to a specific cause before time t, computed by integrating survival in the multiple decrement table times that cause's force of decrement.

Full credibility standard

For frequency, the exposure count needed so that observed frequency is within a stated percentage k of the true mean with probability alpha, based on the normal quantile.

Bühlmann credibility factor

The weight given to the individual insured's experience equals exposure count divided by exposure count plus the ratio of expected process variance to variance of hypothetical means.

Pure premium

Expected claim cost per unit of exposure, computed as expected claim frequency multiplied by expected claim severity, before expense and profit loadings are added.

Net profit condition

In the classical risk process, the premium rate must exceed the expected claim payment rate for the ruin probability to be strictly less than one.

Adjustment coefficient

The positive root of the Lundberg equation, determined by the premium loading and claim size distribution, that governs the exponential decay of ruin probability in initial surplus.

Lundberg inequality

The ruin probability from initial surplus u is bounded above by the exponential of minus the adjustment coefficient times u, giving a conservative exponential bound.

Panjer recursion

A recursive formula computing the aggregate claim distribution for Poisson, binomial, or negative binomial frequency, using parameters a and b and the severity distribution.

Indemnity principle

Insurance restores the insured to the financial position held immediately before the loss, preventing profit from loss and capping recovery at the insurable value.

Subrogation

After paying an indemnity, the insurer acquires the insured's legal rights of recovery against the responsible third party, preventing the insured from recovering twice.

Adverse selection

A market failure where higher-risk individuals buy more coverage at pooled prices, driving average costs up and potentially pushing low-risk buyers out of the pool.

Moral hazard

The tendency of insured parties to change behavior toward greater risk-taking or less loss prevention because the insurer bears part of the cost, addressed by deductibles and co-insurance.

Bimeh Markazi Iran

The Central Insurance of Iran, the supervisory authority that licenses insurers and intermediaries, approves tariffs and policy conditions, and enforces solvency requirements.

Compulsory motor liability

Iranian law requires third-party liability cover for motor vehicles; injured parties can claim from the insurer, with a statutory fund covering uninsured or unidentified vehicles.

Social Security Organization

The state body administering mandatory social insurance in Iran, collecting employer, employee, and government contributions to fund pensions, disability, and health benefits.

Unearned premium reserve

The portion of written premium attributable to the unexpired part of the policy period, calculated pro rata temporis and held as a technical liability.

IBNR reserve

A provision for claims incurred but not yet reported, estimated by development methods such as chain-ladder or Bornhuetter–Ferguson using historical reporting patterns.

Duration gap

The difference between asset duration and liability duration scaled by the ratio of liabilities to assets, measuring exposure of surplus to interest-rate changes.

Contractual service margin

Under IFRS 17, the unearned profit component of the fulfilment cash flows, recognized in profit over the coverage period as services are provided.

Actuarial integrity

The professional obligation to be honest and impartial in analysis and reporting, refusing to suppress or distort findings that conflict with a client's preferred outcome.

Material limitation disclosure

Actuarial communications must state data sources, methods, assumptions, and known limitations so that a qualified reader can assess the reliability of the result.

Conflict of interest

Any interest or relationship that could bias actuarial judgment must be disclosed and managed, with priority given to the public interest and professional standards.

Scope of qualification

An actuary may issue opinions only in areas where they have demonstrated competence; work outside that scope requires collaboration with a qualified specialist.