Somebody asks what the number means. You tell them how you got it. That is the failure mode, and it is diagnosable in one glance: if the first sentence of your answer to a non-specialist contains a method noun, you answered a different question. , , , run-off triangle, basis: every one of those is a "how", and the question you were asked was a "what".
This lesson is the drill. Three numbers UK actuarial graduates have to explain in year one (a , a and a movement in either), translated into plain English in 120 words or fewer, without losing anything that matters.
The four words, and what to say instead
Run this audit over any draft going to a reader without technical expertise. If one of these survives, it has to earn its place by being explained in the same sentence.
| Do not write | Write something like |
|---|---|
| how much we assume money set aside now will grow before it is paid out | |
| the amount we would need to hold today | |
| the estimated cost of the claims we have already taken on | |
| basis | the set of assumptions we used |
The replacements are longer. That is the trade: you are spending words to buy comprehension, and comprehension is what you were asked for. A reader who nods at "discount rate" and cannot repeat what it means has not been communicated with; they have been outranked.
Plain English is not simplification by omission
This is where translation becomes a professional matter rather than a stylistic one. The , Principle 6.3, requires that communication is "accurate, not misleading, and contains an appropriate level of information". Principle 6.4 goes further: where a user has misunderstood something in a way that could have a material impact, "Members should draw the user's attention to this". So the caveat you were tempted to cut because it complicated the message is exactly the one you must keep.
The working rule: a caveat is material if the reader would decide differently knowing it. Material caveats stay, in plain words, next to the number they qualify. Everything else goes to an appendix or into the file. "The mortality assumption is unchanged" is housekeeping. "These figures use data to 31 March and exclude three large claims still being investigated" changes what a manager does on Monday, so it goes in the paragraph, not the footnote.
Number one: a funding level
The scheme below is illustrative, but the shape is the one every pensions graduate meets in year one, and it confuses non-actuaries because good news and bad news arrive together.
Work it out
A pension scheme held £180m of assets a year ago. Over the year its investments returned 9%, with no contributions in and no benefits out. Long-term interest rates fell over the same year, and the amount the scheme is estimated to need today to pay every pension it has promised moved from £200m to £228m. What is the funding level at the year end, in percent to one decimal place?
The model answer is built in a deliberate order. The first sentence gives the good news, because the trustee already knows it and would distrust a note that hid it. The second sentence names the cause in the reader's vocabulary. The numbers arrive in the order the reader met them. The last two sentences pre-empt the two questions the trustee was going to ask anyway: has anything happened to the pensions, and is this permanent.
Number two: a loss ratio
Work it out
A motor account earned £48.5m of premium during the year and incurred £41.2m of claims. What is the loss ratio, in percent to one decimal place?
The customer answer never reaches for "your has increased in line with claims inflation and revised relativities", which is true and useless. It gives two causes, protects the one piece of good news the customer holds, the no-claims discount, and ends with something they can do. The second half is what stops a call becoming a complaint.
The drill, and how to mark yourself
Take any number you have produced in the last year (a project result, a summer job metric, one of the two above) and write 120 words explaining it to someone who has never studied your subject. Then mark it against five checks, honestly.
- Does the first sentence answer the question that was asked? Not the question you prepared for.
- Can the reader act on every number in it? Each figure needs units, a period and a comparison, or it is decoration.
- Did the jargon go, without the meaning going with them? Read it aloud to someone who does not do maths and ask them to tell you what happened.
- Is the material caveat still there, in plain words, beside the number it qualifies? If you cut it because it complicated the message, put it back.
- Does it end with what happens next, or what you need from them? A note that stops after the finding leaves the reader to invent their own conclusion, and they will.
Check your understanding
A one-line update to a claims manager reads: 'Average claim cost is £3,400.' The manager cannot act on it. What would make it actionable?
Your 120-word note to a client runs one sentence long. The sentence you are tempted to cut says the figures do not yet include claims notified in the final week of the period. You should:
Your manager has four minutes before a meeting and asks how the quarterly funding update went. Which opening sentence is strongest?
A note to a trustee board has to use the word 'basis', because the board is being asked to agree one. What does that word have to do to earn its place?
Interview practice
Answer each one out loud before you reveal anything. Reading a model answer first feels productive and teaches you almost nothing; hearing yourself stumble is the part that sticks. Nothing here is scored.
- Technical
Tell a pension-scheme trustee, in plain English, why the deficit rose in a year when the investments did well.
I’ve answered it: show what good looks likeHide the guidance
What a strong answer covers
Good news first, because the trustee already knows the investments did well and a note that hides it loses credibility. Then the cause in their vocabulary: a deficit compares the money held with the amount estimated to be needed today to pay every promised pension, and when long-term interest rates fall that second amount rises. Quantify both sides so the comparison is visible, say plainly that no pension has changed, and end with whether anything must be decided now. Avoid discount rate, present value, technical provisions and basis entirely; if you use one, define it in the same breath.Where candidates lose marks
Leading with the mechanism instead of the movement, and treating 'liabilities went up' as an explanation when the trustee's question is why. Another common miss: implying the scheme is in trouble. State the direction, the size and the fact that a rise in long-term rates moves it back, so the trustee can calibrate rather than panic.Then they push
- The trustee asks whether that means contributions must go up. What do you say?
- Now say the same thing in one sentence for the front of the pack.
- Commercial
Explain to a customer why their motor premium went up when they did not claim.
I’ve answered it: show what good looks likeHide the guidance
What a strong answer covers
Start with the principle in one line: the price reflects what claims are expected to cost for drivers in a similar position, not only their own record. Then two concrete causes: repair, parts and injury costs rising, and the experience of similar drivers coming in worse than assumed. Protect the good news they hold: the no-claims discount is unchanged and still applied. Finish with an option they can act on: excess, cover level, or a written comparison. That last move is what stops a query becoming a complaint.Where candidates lose marks
Reaching for 'risk premium', 'claims inflation' or 'rating factors', which are precise, correct and unusable. Blaming the customer's postcode or age bracket in a way that sounds like a judgement of them. And promising a reduction you cannot deliver: never trade accuracy for a smoother call.Then they push
- They ask whether shopping around would get them a better price. What do you say?
- Where is the line between explaining a price and defending it?
- Technical
A trustee stops you mid-sentence and asks what you actually mean by 'discount rate'. Explain it without reaching for another technical term.
I’ve answered it: show what good looks likeHide the guidance
What a strong answer covers
Give the translation in one sentence: it is how much we assume money set aside now will grow before it is paid out. Then connect it to the number in front of them: when long-term interest rates fall, money set aside now is expected to earn less, so the amount needed today to pay every promised pension rises. The term has now been spent on a reader whose jargon budget is roughly zero, so it has to earn its place by being explained in the same sentence it appears in, which is the rule for any technical word that survives a draft going to a lay reader.Where candidates lose marks
Translating one method noun with another, such as 'the rate used to bring future cashflows back to a present value', which spends the jargon budget twice and leaves the trustee no better off. The other trap is over-simplifying into inaccuracy, calling it 'the interest the scheme earns': it is an assumption about growth, not a record of it, and 6.3 requires plain and accurate at the same time.Then they push
- The trustee then asks why a lower rate makes the shortfall bigger. What do you say?
- How would you translate 'present value' for the same reader?
- Technical
The same valuation result has to reach the trustee board, the regulator and the colleague who covers your desk next week. What changes between the three write-ups?
I’ve answered it: show what good looks likeHide the guidance
What a strong answer covers
Name each room's decision first. Trustees decide, so the finding goes in the first sentence, the note is written to the agenda's time budget, and it gives the decision, the options and the consequence of doing nothing, on a jargon budget near zero. The regulator reads for the distance between what you claim and what you can evidence: date and source the data, name the basis every time, say what you did not do, and let complete beat concise. The colleague gets the subject assumed but not the context: what you did, where it lives, and the thing you are least sure of at the top, because it is the only part they cannot reconstruct from the file.Where candidates lose marks
Writing it once and sending it three times, or moving a paragraph between rooms: the trustee paragraph reads as an unevidenced assertion in a regulatory submission, and the regulatory paragraph reads as cold and evasive in a trustee pack. The one thing that transfers untouched is the arithmetic: the number is the number in all three rooms, and if it is not, one of the documents is wrong.Then they push
- Which of the three documents names the basis in full, and why that one?
- Your handover note leaves the thing you are least sure of to the final paragraph. What is wrong with that placement?