Spring 2018 #15 b)

FrancoisFrancois
in CCIR.ARinstr

Hi,

Is the examiner report for the calculation of the investment on the premium component adequate ?

In the number, we are given UEP Beg AY 2014 and UEP end AY 2014.

The report proceeds to use this unearned premium and apply the interest rate of 2017 on it to determine the interest made.

AY | Beginning UEP | Written Premium | Ending UEP
2014 | 120 000 | 210 000 | 130 000
2015 | 130 000 | 243 000 | 150 000

interest rate FOR CY 2017 = 3%

Why would you do (120 000 + 130 000) / 2 * 3% ?

Is the question simply misleading and the Beg and End UEP are seen @ 31/12/2017 ? Which would be very weird imo

Thanks

Comments

  • javidjavid

    Hi Francois,

    I agree with you that certain items are not fully clear in this question. My thoughts are that the Beginning UEP and Ending UEP are as of the beginning and ending of the given calendar year, e.g. with respect to the first row in your table above, 120000 is as at the beginning of CY 2014 and 130000 is as at the end of CY 2014. That said, even with this correction, they give use the interest rate for CY 2017. With respect to that point, please see the comment here: https://www.battleactsmain.ca/vanillaforum/discussion/comment/287#Comment_287

  • FrancoisFrancois

    Thanks a lot ! I have to agree that it makes way more sense to use the CY 14 rate.

    Awsome job man, very appreciated.

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