Hi,
Would it be possible to post the solution for 2016 Spring #13 following the new method to calculate premium liabilities? It's mostly for the maintenance expense portion I'm unsure if my solution is correct.
There are actually a couple of old discussion threads about this. There is also a section in the wiki for premium liabilities (CIA.PrLiabs) that discusses maintenance expenses:
Take a look at that first. You'll also find the links to the relevant forum discussions there. That might answer you questions. If not, let me know and we can discuss further.
Note the only difference between the old and new method for problems like 2016.SpringQ13 would be how the discount factors are calculated. That's a major part of the calculations but once you have those new factors, everything else would be done the same way. So to apply discounting to the maintenance expenses you would do it just like in the examiner's report except you'd use the discount factors that were calculated using the new method.
The best answer I can give you however (and this is explained in the links) is that according to the premium liabilities source text you do not have to discount the maintenance expenses. They state explicitly that since maintenance expenses are relatively small, the discounting effect is usually not material to the final result.
Comments
Hi @jyec00,
There are actually a couple of old discussion threads about this. There is also a section in the wiki for premium liabilities (CIA.PrLiabs) that discusses maintenance expenses:
Take a look at that first. You'll also find the links to the relevant forum discussions there. That might answer you questions. If not, let me know and we can discuss further.
Note the only difference between the old and new method for problems like 2016.SpringQ13 would be how the discount factors are calculated. That's a major part of the calculations but once you have those new factors, everything else would be done the same way. So to apply discounting to the maintenance expenses you would do it just like in the examiner's report except you'd use the discount factors that were calculated using the new method.
The best answer I can give you however (and this is explained in the links) is that according to the premium liabilities source text you do not have to discount the maintenance expenses. They state explicitly that since maintenance expenses are relatively small, the discounting effect is usually not material to the final result.