BA Practice Exam Version B _ Spring 2020 Q3

valeriyak18valeriyak18
in PRACTICE EXAM

Part (a): An insurance company wants to target customers who have both personal auto and property policies by offering a 5% duo-line discount on the auto policy. The historical experience of these customers is reviewed and they are found to indeed have better auto loss experience.

The answer states that this is allowed. However, I thought that if a multi line discount is offered, it has to be the same % for both products? In this case, auto = 5% but property = 0% (should not be allowed).

Let me know if I'm confusing some concepts.

Thanks

Comments

  • Staff-T1Staff-T1

    Where does it say it has to be the same % for both products? Could you provide a reference? I'm not aware to my knowledge of this requirement

  • valeriyak18valeriyak18

  • grahamgraham

    My interpretation of the answer to the exam question referenced in the prior post is this:

    • the discount for auto can be different from the discount for property
    • the discount for a house cannot be different from the discount for a condo

    In general, the discount cannot vary by property product but it can vary for auto versus property.

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