graham
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This is a question where there is no single correct answer, especially if no data is provided and you have to answer in general terms. I can't remember which year that exam problem came from but the part you highlighted in green further down is a di…
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This is all a little confusing because these methods are new and none of the readings has a complete example of the whole process. It seems that one reading says that reinsurance risk is part of RA (Risk Adjustment) for non-financial risk, and is ca…
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I see what you mean, but I did actually intend to say "reinvestment risk". This is taken directly from the source text from Section 8.3 paragraph 2, last sentence. Reinvestment risk is an important part of financial risk and the definition is: …
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Yes, but it is not in the CIA.MfAD reading. It's in the CIA.Taxes reading here: * https://battleactsmain.ca/wiki6c/CIA.Taxes CIA.Taxes is a low-ranked reading overall, but it does have 2 specific questions that have been asked multiple time…
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I'm not sure if that's correct. Here's one way of thinking about these concepts: * Vicarious liability makes a statement about who is responsible. * Joint and several liability makes a statement about how much each responsible party is liable …
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A normal commission is an amount paid by an insurer to a broker for business the broker brings to the insurer. This amount is usually a percentage of premium. (In the same way, a reinsurer might pay a commission to a primary insurer that cedes busin…
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Strictly speaking you are correct. The event decision tree doesn't include considerations related to materiality and this is an oversight on the part of the authours. In the paragraph above the event decision tree in Section 4 of the source reading,…
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I've noticed in past examiner's reports that for questions like this, the graders are more willing to accept a wider variety of answers. This is more of an open-ended question and they seemed to accept any answer that could reasonably be expected to…
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I have clarified this, thx! * https://battleactsmain.ca/wiki6c/PACICC.Comp#Explanation_of_2015.Spring_.2313
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Nice! It's linked from the wiki!
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It's not an exact science and the grading rubric can change from year to year, but in this specific case, availability and affordability almost always go together. I would probably put them as a single point. Here's the reasoning: * It's easy t…
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That's a good point. It's hard to say for certain what would be considered an acceptable answer in a given situation. Part of the issue is that all these readings were written by different groups of people, and the exams are often graded by differen…
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Here's the way I understand that statement: * You're correct that under current practice, MfADs/PfADs for claims and reinsurance need to be calculated and added to the "best estimate" as a margin. But only the total is reported on the balance s…
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Yes, that's an error in the examiner's report. I double-checked in the MSA ratios source text from the study kit and the threshold for "Overall Net Leverage" is 500%. (The conclusion is still valid because the calculated ratio was 513%, which is out…
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Unfortunately, there is no clear answer to this because the solutions in the examiner's reports often contradict themselves as well as the MSA Ratios source text. But luckily you usually don't have a choice. They often only provide "investment incom…
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Investment income (excluding gains) does not include investment expenses. That means you have to explicitly subtract investment expenses. But just to be safe, it's a good idea to briefly state an assumption like that when answering an exam question.…
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Yes, the "providers" are "health care providers". The reading doesn't go into detail but my understanding is that there is a certain fee per person, per type of treatment. The treatment could be substandard or not appropriate but that wouldn't facto…
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The standard U.K. HO policy includes flood coverage by default but the purchaser can opt out of flood coverage if they want to. Most purchasers don't even think about this however. The result is that around 95% of purchasers have flood coverage whil…
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The difference between RR and APV is as follows: * APV is a quantity calculated by the actuary * RR is what is actually recorded in financial statements For example, suppose the actuary does a reserve analysis and calculates that APV = $98…
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That was a typo. It should be "historical" period (not "forecast" period.) Thx!
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That's a good point. If you really want to calculate delta-P properly you would consider each component separately. If a component like maintenance expenses is not interest-rate sensitive, then the delta is 0 under an interest rate shock. In the …
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For CapReq(interest rate) you would normally use (a)+(b)+(c), unless there was no reinsurance, or the question didn't provide any information on maintenance expenses or contingent commissions. If you come across the problem you mentioned where yo…
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Someone asked a very similar question a few years ago. Here's the link to their question and my response: * https://battleactsmain.ca/vanillaforum/discussion/comment/862 If that doesn't answer your question, please let me know. (The wording…
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I'm assuming you are referring to the NEP calculation right at the beginning of sample answer 1: * Net Earned Premium * = (100,000 + 80,000 - 90,000) x 75% * = 67,500 The quantity in parentheses is the gross EP for 2016 and the 75% is the…
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I thought this was a hard problem because there was nothing like it in the reading or in previous exam problems. In case you haven't seen this other forum post, take a look here: * https://www.battleactsmain.ca/vanillaforum/discussion/295/2015-…
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Update: This issue should now be resolved.
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We've been in contact with our hosting service since early this morning. They are working on the issue although they have not provided an estimated resolution time. Many apologies for the problems.
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Are you referring to the formula for operational risk? If so, I recommend memorizing this formula and all the risk factors. If you look further down in the examiner's report, they say that a common error was not knowing the risk factors in that form…
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That would depend on the wording of the question, but I think they would always ask for more than just which items are impacted, otherwise the question would be too easy. But even if they didn't ask for increase/decrease, I would provide the answer …