Taxes in Klann
Is any of the information on taxes in Klann outdated because of the TCJA and information noted in the tax section? For example, Klann states, "Companies determine the appropriate discount factor by accident year and line of business,
by using either their own or IRS payment patterns and IRS published discount rates." But I thought payment patterns were fully determined by the IRS now using industry data. Wouldn't this make the payment patterns the same?
Additionally, the wiki states "manipulating the payment pattern and discount rate is a way insurers can reduce their taxable income." How could an insurer do this when discount rates and payment patterns are determined from corporate bond yield and IRS calculation?
Last;y, did Klann paper change or something? It is only 8 pages and it seems like many of the past exam problems aren't really covered in examples in the paper.
Comments
Your tax observations are correct. CAS dropped a note in the syllabus, saying to read the Klann paper in view of the Odomirok text. (It's in the reading list, for Klann.) It's a lazy way to do it, but I think it is their acknowledgement that certain things like tax has more up-to-date info in Odomirok.
We'll revise that wiki statement, thanks for pointing it out.
I don't think Klann has been revised, seeing that it is the 2013 edition.
Yes, all of that is correct. I've inserted a note in the appropriate spot in the wiki that refers the reader to the current tax information in Odomirok.
And you're correct that some of the past exam problems don't seem to come from Klann. There was another reading on commutation that was removed from the syllabus that covered a wider range of topics. It was difficult however to separate that reading from the Klann reading so to be safe, I kept those old exam problems. The wiki explains how to solve them however so you should be ok if a problem like that comes up.