Decision Tree - Right branch

oxalisoxalis
edited September 2021 in CIA.Subseq

Hi,

for an event that uses the right branch, how do we know if it would be reflected as a subsequent event, do we go through the EWDP process or there's a faster way to come to a conclusion? If it needs to be reflected, do we always withdraw/amend, or there could be cases where we reflect but then only disclose and it doesn't invalidate the report?

Also, do we need to memorize the event dates in the battle cards?

Thank you,

Comments

  • grahamgraham

    For the event dates in the BattleCards, I assume you're referring to quiz 1, so that would be "calculation date" and "report date"? I would say yes, you need to memorize them. I doubt an exam question would ask you for these definitions but you have to know them to be able to answer other questions about subsequent events.

    For your other question about the right branch: First, here's a tip:

    • Tip: For many of these subsequent event problems, you can use common sense to figure out what should be done. In other words, you don't actually need the decision tree. Of course, when you answer the question on the exam, you do have to explain it using the decision tree, but don't let the decision tree confuse you.

    Do you have to go through the EWDP process for the right branch?

    • This is not clearly explained in the source text, but I think you do. The reason is that when you're on the right branch, you have to pretend it was a subsequent event (even though it isn't) and determine what would be done using the middle branch of the decision tree.
    • Note that for Example 6.2 in the source text (judicial decision) they simply state that for most insurers where this was not a subsequent and you're on the right branch, the event would have to be reflected but they don't provide a reason. In other words, this example did not seem to use the event decision tree. Maybe the conclusion to reflect was obvious? I don't know, but I think it's safer on the exam to refer to the decision tree and the EWDP process.

    Here is what the right branch of the decision looks like:

    According to this, if the event needs to be reflected, you don't always withdraw/amend. You might just disclose/inform the user if event does not invalidate the report. An example would be if the event is not material - you would just disclose/inform but there would be no reason to amend the report for something that isn't material.

    So I hope that helps, but remember that when you get a subsequent event question on the exam, try to think of a common sense course of action before you apply the decision tree. Then once you understand the scenario from a broader perspective, you can go through the detailed steps of the EWDP process and the decision tree.

  • oxalisoxalis
    edited September 2021

    Thank you Graham for the detailed explanation!

    As for my question for: do we need to memorize the event dates in the battle cards?
    I meant the dates for the example cases, for example in the ice storm case, we have Jan 5th as the event date, Dec 31rd as the calcuation date, etc. do we need to know by heart these dates?

    Thanks!

  • grahamgraham
    edited October 2021

    (Sorry, I had this in my drafts from a few days ago but forgot to post.)

    Oh gosh, no. You don't have to memorize those dates. The exam question may give you a scenario similar to one of the text examples, but they would also give you the relevant dates. You would just have to know how to determine whether the event is a subsequent event based on the given dates and then apply the decision tree.

  • oxalisoxalis

    perfect, good to know!

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