• Trying to balance the profitability and competitive requirements is a tough task in today's competitive marketplace.
  • The profit testing, premium adjusting, and benefit adjusting process is an iterative process involving a lot of give and take.
  • There are many factors that the pricing actuary can adjust during this process.
    • Premium rates, agent compensation, cost of insurance charges, expense charges, surrender charges, and investment margin are all examples of items that can be "fine-tuned."
  • The key is to find the proper balance of these items so that an acceptable level of profit is achieved, while at the same time producing a saleable product.
    • It is not uncommon for the pricing actuary to occasionally question if this is all possible, but somehow we seem to always find a solution.
• It is common during this process to question, or to have others question, the assumptions used.
  • While it is appropriate to use the market as a check on the reasonableness of the assumptions you're using, you need to be very careful about making changes that can't be supported.

--  William Gatterman

1987 - SOA - Product Development Process -- Bringing New Products To Market Quickly And Efficiently, Society of Actuaries - 22p