Q19

oxalis0217oxalis0217
in CAS Sample IFRS 17 Questions

Hi,

Can you please thorough explain the question c of this question (point by point), I don't even know how to approach this question...are the different points mentioned by CAS referenced anywhere in the source reading, or it's highly customized answer based on the question?

Thank you

Comments

  • Staff-T1Staff-T1

    Question c can be answered using either work experience or directly using first principles:

    • If you have done PPA in Ontario, then you know it can't be used for pricing because it's prohibited
    • If you have done PPA in Alberta, then you know it can be used for non-mandatory coverages which means you should separate contracts with differing credit scores if there is indications that a group is onerous

    Using first principles:

    • Just talk generally about how difficult/easy it would be to practically create groups of contracts that would segment the book by credit score. Basically just use intuition.

    This isn't specifically covered in any part of the syllabus - You just have to use your work intuition to answer it

  • Justwanta6Justwanta6

    Can you tell me if my understanding of Part b is correct?
    So the question is saying the groups of contracts are being evaluated quantitatively whether they are onerous---> is FCF >LRC ex. LC. This means that the contracts already passed the qualitative assessments and therefore the indicators we listed from part a are not sufficient to answer part b.

  • Staff-T1Staff-T1

    Part (b) is not a quantitative onerous assessment. It's just asking whether you can make any conclusions on onerosity based on the given statements. Part (b) is more like concrete examples of part (a). No quantitative evaluation is being done here

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