WP Notation

jyjk0519jyjk0519
in CCIR.ARinstr

Hello,

I was just curious as to the notation and relationship between the different WP.

There is
DWP, AWP, NWP, CWP and GWP.

My understanding is NWP = DWP + AWP - CWP
What is the difference between DWP and GWP?

Thank you

Comments

  • grahamgraham

    Your formula for NWP is correct.

    Then GWP = DWP + AWP. (Or at least, it should be. Just make sure to pay attention to how the information is provided in each individual problem in case the problem provides a slightly different interpretation.)

  • jyjk0519jyjk0519

    Hi Graham,

    Sometimes I feel as if in the questions they use direct and gross interchangeably. Could you comment on the difference between the two?

    Thank you

  • grahamgraham

    You're correct that sometimes direct and gross are used to mean the same thing, although technically they are not the same if there is non-zero assumed business. In this context, the 3 different "types" of losses are:

    • direct, assumed, ceded

    Here, "direct" means business the insurer writes through it's own channels. "Assumed" business is when the insurer acts as a reinsurer and takes on business from another insurer. And "ceded" is when the insurer sends business to a reinsurer. Then,

    • gross = direct + assumed
    • net = direct + assumed - ceded

    So if you know that assumed losses = 0 then gross = direct. It's a little sloppy when readings or exam questions equate the two, but usually you can figure out how they want you to interpret it based on the context. As always, it's a good idea to briefly mention any assumptions you make so the graders know what you did.

Sign In or Register to comment.