2014F Q13 a.

dogechowdogechow
in Dutil.FA

In the sample answers, it states that the participation ratio for FA varies by the 5 classes of business. However, isn't it only the first two that pertain specifically to FARM (following the order in the battlecards)? My understanding was that categories 3 and 4 are used to allocate RSP and category 5 is used to allocate UAF, and that these wouldn't have an impact on the residual market allocation.

Comments

  • Staff-T1Staff-T1

    Tbh I think the battle card is not really clear here. It's more of saying for each of (FARM, RSP and UAF) these are the ways to determine your participation ratio. For example, I wouldn't consider "UM claims" as a class of business. I believe the 5 classes referred to in the exam question pertains to Bodily Injury, Accident Benefits, Collison, Comprehensive and Direct Compensation for Property Damage

  • grahamgraham

    I went to check the BattleCard and maybe edit it to make it more clear but I'm not sure I'm looking at the same one as you guys are. Which quiz number and BattleCard number is it?

  • dogechowdogechow

    Hi Graham,

    I'm referring to the 5 classes of business under "Participation Ratios and Sharing" (end of BattleQuiz 1). If I understand correctly, only the first two classes are relevant for determining the participation ratio of FARM:

    1) PPA (non-fleet, non-pool)
    2) all auto excluding 1) and RSPs

    However, in the sample solution to this question (comparing the differences between FARM and RSP), it states that the participation ratio for FA varies by the 5 classes of business (which also includes the classes 3) and 4) used to determine the RSP pools??).

    My question is then: why are they looking at FA as a whole when the question is asking to compare FARM and RSP?

  • grahamgraham

    I don't think part (c) of this question was specifically about the FARM or the RSPs. In other words, it was not related to any other parts of the question. They were just testing whether you memorized the list at the top of page 4 in the reading. FA includes FARM, RSPs, and UAF.

  • dogechowdogechow

    Hi Graham,

    To clarify, it's 2014F Q13 part a) that is giving me confusion. In this question, we are specifically comparing FARM and RSP, but the sample solution seems to be comparing FA (as a whole) to RSP when it comes to participation ratio. I'm inferring this since they reference the 5 classes of business (encompassing FARM, RSP, and UAF).

    This is the part that I'm failing to understand - for all the other rows in the table (rates, admission, customer knowledge, etc.) the comparison is between FARM and RSP as I would expect. This does not appear to be the case for participation ratio?

  • grahamgraham

    I think I was looking at a different question. I see what you mean now. Yes, the row for participation ratio in the examiner's report doesn't really make sense. I would ignore it. See the relevant BattleCard instead.

    Note that the BattleCard for "participation ratio" wasn't showing up in the quiz. I've fixed it so it now appears as BattleCard 7 in quiz 2.

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