Cost Share

wilsonchan18wilsonchan18
in Chev.Agric

Hi,

I am also confused on the Cost Share. I understand that there are Premium received from Insured based on PremRt, and the Claim should be paid out to Insured based on Indemn$. Basically, if taking the 80% in Loss Distribution, the Pool (Prod-Prov-Fed funding) with Prem received will just paid the Indemn$, so can I interpret that the Indemn$ as the cost, since admin cost will be shared b/t Prov and Fed I learnt from the Battle Quiz?

Thanks and Warm Regards,
Wilson

Comments

  • grahamgraham

    I edited the last 2 BattleCards in quiz 4 to make it more clear. The idea behind cost-sharing is that premiums are shared. Take a look at the edited BattleCards and if you still have questions, please let me know.

  • wilsonchan18wilsonchan18

    Hi Graham, I understand the cost is from the Producer perspective and I kind of see what you are trying to say here. But I still cant connect the dots between the PremRt and Premium sharing. The Production Insurance Program can be Individual or Collective, and with the Indem$, and L$, we can work out the Prem$ and PremRt.

    So I guess the Pool will receive a Total Premium from different Producer, and because this Pool is efficient and being non-profit, only the Indemnity Losses Amount of Premium is needed rather than the Full Premium. So in the end after the pool receiving Total Premium and paying Indemnity, the excess amount will be spreaded out to Producer again? Is it what the Battle Quiz is trying to say? I am sorry, I am still quite lost on how Premium are to be shared and how to determine the % and how it is related to the Prem$ and PremRt worked out earlier.

  • grahamgraham

    I've pasted the section in the source text related to cost-sharing below. It isn't very detailed so there isn't much more I can say about this:

  • wilsonchan18wilsonchan18

    Thanks Graham for pasting. But I still cannot connect the dots here between PremRt and Prem Sharing. :/ Do you think they will ask deep as this level? Maybe I shall move on first?

  • grahamgraham

    I think it's probably good to move on. Sometimes things make more sense if you leave them and come back to them later. If you get a question on this, it would probably just require you to have memorized the answer.

    One last thing: The premium rate is the actuarially sound rate based on loss experience. If the rate was $100 then the producer might only pay $40 for "Comprehensive" coverage and the remainder of the cost would be divided between the provincial and federal government. At least, that's how I interpret the source text. Again, it isn't explained in any detail. If you have a basic awareness, that should be enough to get you through any exam question the might throw at you.

  • wilsonchan18wilsonchan18
    edited August 2021

    Ok, got you. I think I am now more familiar and aware of what are happening behind :)
    Thank You Graham for answering clearly and patiently!

  • grahamgraham

    You're welcome!

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