RP(Section 2 Certified Reinsurance)
Is this "Overdue Reinsurance" the same as slow paying? Meaning, would I have to determine if the reinsurer is slow-paying first & then calculate this piece? Or would this piece always be calculated no matter what the determination of slow-paying is?
Comments
Overdue is not the same as slow-paying. Slow-paying means they have a high proportion of (non-disputed) overdue recoverables, at least 20%.
This piece (Section 2) is always calculated. It doesn't matter whether the reinsurer is slow-paying or not. It's just 1 term in the formula that concerns slow-payers, the "F" term, which is:
In my examples, I told you the value of F directly. Odomirok states that
but the new Part 6 isn't dicussed in much detail. And the 2 annual statement examples, Liberty Mutual and Travelers don't show the new Part 6 either. That means it's hard to get an accurate picture of how Part 6 really works using only the official syllabus material. The explanation I provided in the wiki comes directly from Odomirok and if you know the 2 sections of the new Part 6, and the formulas I put in the wiki, that should be sufficient to answer any exam question on that topic.
Take a look at Table 30 on page 138 of Odomirok. That shows the 4 separate pieces that make up the reinsurance provision.
Awesome, thank you so much!