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Effect of Experience Investigation Periods on Actuarial Assumption Selection

Abstract

Experience investigation periods represent the length of historical data examined by actuaries when assessing past experience and selecting assumptions for actuarial calculations. The period selected can influence the extent to which recent experience, long-term trends, and unusual variations are reflected in the analysis. Appropriate selection of the investigation period is therefore important for developing actuarial assumptions that adequately represent expected future experience. This study will examine the effect of experience investigation periods on actuarial assumption selection. It will assess how different investigation periods influence the assumptions derived from historical experience and determine the extent to which shorter and longer periods produce variations in selected actuarial assumptions. The study will also consider how changes in historical experience affect the suitability of assumptions for future actuarial applications. The study will focus on experience investigation periods, actuarial assumption selection, historical experience, mortality experience, withdrawal rates, claim experience, persistency rates, assumption development, experience analysis, and actuarial valuation. Different investigation periods will be applied to relevant historical data to estimate experience-based parameters. The resulting assumptions will be compared to determine how the length of the investigation period affects the selection and stability of actuarial assumptions. A quantitative research approach will be adopted for the study. Historical actuarial and insurance experience data will be analysed using descriptive statistics, experience analysis, trend analysis, parameter estimation, actuarial techniques, and sensitivity analysis. Assumptions derived from alternative investigation periods will be compared to identify variations in their estimated values and assess their implications for actuarial calculations. The study is expected to reveal that experience investigation periods may have a significant effect on actuarial assumption selection. Shorter investigation periods may place greater emphasis on recent experience, while longer periods may provide a broader representation of historical patterns. Differences in selected assumptions may arise from changes in mortality, claims, withdrawals, persistency, and other experience factors over the periods examined. The study will be useful to actuaries, insurance companies, pension administrators, valuation specialists, regulators, and researchers. It may provide useful information for determining appropriate investigation periods, improving the consistency of experience analysis, and strengthening the process of selecting actuarial assumptions. The findings may also assist practitioners in assessing the sensitivity of actuarial results to the historical period used in assumption development. The study concludes that experience investigation periods are important considerations in actuarial assumption selection because the length of historical experience examined can influence the assumptions adopted for actuarial calculations. It is therefore recommended that actuaries carefully evaluate the relevance, stability, quality, and recency of available experience data when determining appropriate investigation periods for actuarial assumption selection.

Keywords: Experience investigation periods, actuarial assumption selection, experience analysis, historical experience, mortality experience, withdrawal rates, claim experience, persistency rates, actuarial assumptions, assumption development, actuarial valuation, experience data, trend analysis, parameter estimation, actuarial analysis.