Appendix B sh1 - LIC
For all AYs, the discount rate used for amount paid in 2024 is corresponding to "Year 1" in the Discount Curve table. (same thing for all other years, ie, discount rate in "Year 2" is used for amount paid in 2025, regardless of AY). Why is this the case? Why we are not using "Year 2" rate for AY 2022 paid in 2024?
Comments
The discount curves are not curves meant to discount any specific Accident Years. They are yield curves meant to discount cash flows at certain periods in time. In other words, cash flows paid in year 1 after 2023 would be discounted at Year 1 rates, cash flows paid in year 2 after 2023 would be discounted at Year 2 rates and so on and so forth.