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We are calculating the investment income for Accident Year 2013 - The unpaid will necessarily be 0 for this AY at the start of 2013 even if they start writing their business in 1950. You don't have to assume that they start writing their business in…
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Yes, this is my understanding of Premium liabilities and the source confirms it. @graham thoughts? Although quick note that with the transition to IFRS 17 I believe this is the last time this will be tested
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CI = Net Income + AOCI. I think that would be the extent to which you would need to know
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It would mean to do it on a direct basis. Gross basis includes assumed premiums which you wouldn't want
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The wiki is correct (Refer to page 18 of the MCT guidance). In spring 2015, the (UEP + O/S)*0.3 is = 3600 > 3000 so we just used 3000. Bear in mind that when these reports are written, it's just a sample of an answer that received full credit. It…
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It's still applicable - The DCAT is now the FCT. I think it's still good practice
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In the source, it's says "The court held unanimously that the Director's delegate acted outside the mandate of subsection 2(1.1)(g) of the SABS, and consequently outside his jurisdiction by failing to follow the process in the Guides which directs t…
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I think it would be to be more conservative since the factor is scaled by (1-PV factor) A higher PV factor would lead to a lower asset for future income tax.
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Yeah I was referring to column 3 whoops. For column 7, you only release the capital at the end of the year because you need to hold capital for each period -> Starting at 0 would mean you'd be releasing capital for 2016 before 2016 has even start…
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As an accident year matures, the IBNR estimate will decrease. As your IBNR estimate decreases year over year, the corresponding risk margin to apply to it should also decrease as the final ultimate loss becomes more and more certain.
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[3500 + 0.55 x 20000/(1.02^0.5) ] <- Amount Paid in CY 2016 from AY 2014 and AY 2015, discounted back to Dec 31 2015 [0.444 x 20000/(1.02^1.5)] <- Amount Paid in CY 2017 from AY 2014 and AY 2015, discounted back to Dec 31 2015
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It's a typo - It should be discounted
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The payment is made in the middle of 2016 so you would have to discount for half a year
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This is because at Dec 31 2013, AY 2012 ( 2 years remaining to complete payout) is at a different maturity level than AY 2013 (3 years remaining to complete payout)
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We need to include the investment rate PFaD for the PV. It's just the way the formula is defined in the CIA educational notes
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It means punitive awards are meant to deter insurers from carrying out an abhorrent act, rather than just being seen as a "cost" of doing business. Giving an unrelated but simple example, if an insurer was involved in false advertising which brings …
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So I went into the source and this is what it says: * Commuting a claim is a process in which one party is relieved of its obligations in respect of the claim in exchange for a cash payment. * Reinsurance contracts may contain a commutation cl…
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Your initial premise is not correct. A decrease in DPAE does NOT guarantee a decrease in Expenses. To your next point, it's not premium acquisition but premium acquisition expenses that are being recognized. The only purpose of a DPAE is to add an…
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I am unsure what you mean here. I think the question is pretty clear in terms of who is commuting to who... If the reinsurer is commuting a claim -> Reinsurer gives back the claim If the insurer is commuting a claim -> Insurer gives the cl…
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We do not use DR - MFAD here to calculate the discounting factor. The discounting factor was calculated in Part A using the payment patterns. You could use the second formula and it will provide you the same PV factor
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I'm not sure I follow. We don't deal with GAAP in this exam since that is a US based system
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For me, BoD is at the top, then senior management is next (sometimes the same as the BoD) then "regular" management. I would say the BoD is more involved in the higher level objectives whereas management is more on the day-to-day work. I think the f…
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Good question. I can't find it in any of the B1-B2 papers in the learning objectives - I know this question has been asked numerous times in past exams though. Maybe it was on a paper that has since been removed? @graham thoughts?
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Hi, can you attach your Excel file please?
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I'm not entirely sure of the mechanics, but there should be differing ALAE amounts and you probably won't always be able to obtain full recovery from the at-fault insurer all the time
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Yes, it would be possible. I just assumed it is a per risk XOL in this question. Aggregate XOL contracts do exist. It really depends on the terms of the contract
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Yes that's correct
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In a way, yes. But sometimes the at-fault driver will have no coverage (uninsured motorist) or not enough coverage (underinsured motorist) so I wouldn't say it's directly equal.
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There's two cases: If you are at fault then your TPL-PD coverage pays for the other person's vehicle damage. Your own would be covered under collision. If you are not at fault, then your DCPD coverage pays for your vehicle damage, and your insurer…
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Yup they would also be included. I think there's a plethora of answers to this question on pgs 24 -35. Graham probably provided 2 examples but by no means is that a comprehensive list.