CT6-Statistical Methods: An Introductory Brief

Are you planning to appear for CT6 in the current examination diet? But not sure what the subject deals with? What are the links with other subjects and when is the best time to give this exam.

I tried to accommodate here all the data which I could. Hope this article will answer your questions and provide a good understanding of the subject.

CT6- statistical methods is a subject which gives you an exposure to the general insurance side of
actuarial work. It includes setting the premium for general insurance policies, checking whether the
policies are going to ruin the company and also to set reserves for liabilities. It has a lot of interesting
concepts which would be fun to learn. Some detail explanation of those concepts are:

  • Chapter 1 deals with introducing to different methods which will help in choosing among
    different alternative strategies available by considering payoffs under each strategy.
  • Chapter 2 deals with Bayesian statistics (the one which we studied in school times, just an advance version by considering the probability of continuous distribution as well).
  • Chapter 3 introduces some new statistical distributions which will be used to model loss from the claim arising in the general insurance sector.
  • Chapter 4 explain what are different types of reinsurance agreement and what are their different conditions. Accordingly, it will help in adjusting insurer and reinsurer the premium and claim amount.
  • Chapter 5 and 6 gives an idea of how to decide for various input factors while forming a new type of policy and then how to calculate the premium for those new policies.
  • Chapter 7 and 8 will help in understanding how to calculate total claims arising from a portfolio or policies.
  • Chapter 9 will describe how to check whether a ruin has occurred or not. In other words, it helps in calculating the probability of ruin for an insurance company.
  • Chapter 10 explains how to decide which factors should be used and which should not be, at the time of forming the policies. Basically, which factors might and might not have a significant effect at the time of setting the premium for a policy.
  • Chapter 11 describes how to set reserves for claims which have occurred but not have been reported (or not fully reported). Since those are likely liabilities for an insurance company, they are required to set the reserve for those cases.
  • Chapter 12 and 13 deals with a set of random variable (this is a statistical term). These chapters basically help in forecasting values in order to check whether there is any major difference in trend or not.
  • Chapter 14 includes simulations which help in running a model multiple times in order to decide among alternatives.

This is a brief description of a context of CT6. But the material consists of a lot of more concepts. I hope this will help you in getting an insight over the subject.

Some common questions that students have regarding CT6 are covered below:

Ques. What are the major changes in CT6 as per 2019 curriculum?
Ans. Under 2019 curriculum, CT6 is being combined with CT4, resulting in a new subject called CS2 (Core Statistical 2). This exam will consist of 2 parts. One will be a 3 hours 15 minutes written examination, and the other will be 1 hour 45 minutes of practical examination using R programming.

So, comparatively, it can be said that current chances for clearing CT6 was more than clearing CS2, considering the level of difficulty in main study material as well as R programming. But on the other side, it will help students to develop their software skills along with actuarial concepts as this is the basic requirement for the job these days.

Ques. When should you give CT6?
Ans. For those students, who had already cleared CT4, it would be recommended to appear for CT6 before 2019 curriculum changes and also to get an exemption for CS2 by February 2019. So, September 2019 is your last chance to give your best for this paper.

On the other hand, aspirants who had not appeared either for CT6 or CT-4, it would be advisable to not touch these subjects until and unless you are a very risk-taking person (as the probability of clearing both these subjects in the same attempt is very low).

Ques. How much time do I need to complete the syllabus?
Ans. The ideal time required to prepare for CT6 is 150-200 hours, as suggested by the institute. However, it varies from individual to individual depending on their interest and dedication.

Ques. What is the average pass percentage of IAI and IFoA?
Ans. If we consider pass %age of past few years, then in any recent year the pass percentage of CT6 from IAI has not crossed 30% (even this amount has not be reached). For IFOA, it is 56%. I would suggest if you are willing to reduce the risk, then in this attempt give it both, from IAI and IFOA.

Ques. What is the passing mark of IAI and IFoA?
Ans. Based on the average of last five exam diets, passing marks for CT6 is 60 (IFoA). However, IAI does not disclose its pass marks.

Ques. Which topics should be focused on for scoring good marks?
Ans. Although most of the topics are important in CT6, there are a few whose deep understanding would help you in actuarial work. Some of them are:

  • Credibility theory
  • EBCT models
  • Time series
  • Runoff Triangle (Most important from interview point of you)

Besides these, it would be advisable to always go for in-depth knowledge, instead of just solving questions as this would anyhow help you in future when you’ll be engaged in practical scenarios.

Ques. Will it be helpful to take coaching for CT6?
Ans. I don’t believe that there is an ideal yes/no answer for this question. It depends on you if you can manage it yourself or not. If you ask me, I didn’t take any coaching, but also it took me 2 attempts to clear. So, I would suggest, start your course early (not just 1 or 2 months before), start studying yourself, try to understand, give your try and still you think you need guidance, coaching is always there for you. But, don’t just join coaching before trying, it’s not going to help. (Again, this is my opinion. Not necessary you need to follow.)

Ques. Knowledge of which other CT papers should I have before attempting CT6?
Ans. It would be a lot difficult for you to understand CT6 if you have no prior knowledge of CT3. I won’t recommend you to go for CT6 without CT3. CT3 deals with basics of probability and statistics which is very much used in CT6. Some concepts such as poisson process were introduced in CT3 which you will be able to understand clearly in CT6. So, first clear the base then go ahead.

Ques. Which subjects would require the knowledge of CT6?
Ans. Since CT6 forms the basics of General Insurance, concepts introduced in CT6 will help you in carrying your career forward in general insurance. So, while giving ST1 (Health and Care Specialist Technique), ST7 (General Insurance- Reserving and Capital Modelling Specialist Technical) and ST8 (General Insurance- Pricing Specialist Technical) will require knowledge of CT6 (to what extent, even I don’t know, because I haven’t read those subjects. But I guess, even the name of the subject itself speaks that it requires CT6 knowledge!).

Ques. Is there any additional material which needs to be studied?
Ans. As per my opinion, Core Reading and Q&A Bank along with past papers would be sufficient to clear any CT papers (including CT6). But, if you think you need more questions to practices, you can purchase revision notes. Revision notes is a good way to improve yourself in a particular chapter and is helpful in last moment revision. But it is not compulsory. It depends on you only.

Ques. Can you give some tips on clearing CT6?
Ans. I would suggest being positive. Don’t lose your hopes just because you are not understanding a concept after first reading because its normal! Trust me, it is normal. No one gets it in the first reading. You just need to be patient to read that again and again until you get the logic behind that.

I would also suggest you to not to leave Q&A bank for last moment. These would give you an insight over the type of questions. So, do it before the last moment to clear your queries.

I would also say to go with at least 5 years past papers and try to do them in a time-bound manner. Don’t just clear questions, try to clear them within those 3 hours.

I think if you do past papers 2 times, you will definitely be able to clear this exam.

That’s all from my side. I hope it will help you in planning and deciding over CT6. Hope I would be of
any help.

ALL THE BEST.!!

To know more on how to prepare for actuarial science exams, click here.

 

You might also like More from author