Inconsistency and omitance
During a recent actuarial project (valuation of general insurance reserve), auditor pointed out to client the inconsistency of recognising a component of premium (let's call it "CP1") in the total premium but not using it in calculating unearned premium reserve (UPR). So they asked client to include CP1 in their calculation of UPR. Please bear in mind that due to the choice of words the client used, it probably complicated the actuary's and my understanding of what the changes were. I determined which part of our workflow that was affected and looked at the relevant spreadsheets. I pointed out an inconsistency where within the same formula, one parameter excluded CP1 whereas another included it and we multiplied them to obtained estimation of another parameter. I tried my best to explain it to the actuary but first 3 attempts failed. I was frustrated and running out of idea of how else to present this point, when the actuary used a specific example using the data. I t...