• 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