Reading Change - Removal of Appendix B
One consequence of the updated reading may be restricting the NUMBER of acceptable "ripple effects" to the LARGER categories described on page 12 [6 bullets]:
- Adjustments to assumptions
- Management Actions
- Policyholder actions
- Regulatory actions
- Rating agency actions
- Capital injection (distribution) changes
- Reinsurer actions [not listed in text] - only use this if you have to...
A lot of the options in Appendix B are duplicates of each other. I believe CAS wants us to know all 6 of the above.... (eg. list 4 types of ripple effects and example of each = 2.00 PTS).
eg. for Claim Frequency and Severity Risk
- Reinsurer actions:Insolvency of one or more reinsurers accounting for a significant portion of the insurer’s reinsurance coverage;
- Assumptions: Increases in the policy liabilities related to current reinsurance contracts that are swing-rated, have variable commission, or require reinstatements;
- Reinsurer actions Loss of reinsurance coverage for remainder of term;
- Reinsurer actions Increases in reinsurance rates or non-availability of reinsurance at the next renewal;
- Assumptions:Post-event inflation (i.e., a significant temporary increase in the cost of labour and materials) following a catastrophe resulting in increases to the ultimate cost of unpaid claims as well as future claims;
- Assumptions: Post-event inflation in regions not directly affected by the catastrophic event;
- Regulatory actions Forced sale or liquidation of assets;
- ?? Increased Property and Casualty Insurance Compensation Corporation (PACICC) assessments resulting from failure of other insurers; and
- Rating agency actions Rating agency downgrade.
In this way CAS can avoiding giving points for duplicate like answers:
- Reinsurer actions:Insolvency of one or more reinsurers accounting for a significant portion of the insurer’s reinsurance coverage;
- Reinsurer actions Loss of reinsurance coverage for remainder of term;
- Reinsurer actions Increases in reinsurance rates or non-availability of reinsurance at the next renewal;
And not expect candidate to memorize pages of "arbitrary" examples [maybe ???].
Comments
I'm sure the CAS would never make you memorize pages of arbitrary and useless information. :-)
Thanks for your post. I've linked to it in the "Study Tips" section of CIA.DCAT here: