Spring 2016 #24 - Risk Factors for Personal
part c of this question asks us to identify 4 risk factors AA might consider when preparing SAO for a personal lines carrier. The examiner's report lists a common mistake as including "impact of soft market conditions".
Is there something about personal lines that make them non-responsive to interest rate environments and capacity shifts in the insurance marketplace? I would think that carriers would update their targeted combined ratios, and that would filter through to underwriting guidelines at least (if not rate filings).
Comments
It was a bit of an unfair exam question. There's a detailed discussion of this question in the wiki here:
I think they would have accepted "interest rate risk" as long as you explained specifically how this would affect a personal lines carrier. (If you had just listed "interest rate risk" without further explanation, you would not have gotten credit although I'm not sure why not.)