BattleCard 62
Where does this information come from? I can't find reference to it in the source text.
identify 2 financial & 2 non-financial considerations regarding cash flows in a reinsurance commutation
FINANCIAL:
- amount & timing of cash flows
- discount rate applied to cash flows
- payment pattern of cash flows
NON-FINANCIAL:
- court decisions
- life expectancy of claimant
- quality of reinsurer
Comments
I'm not sure how I came up with that. You're right that the answer is not explicitly in the source text.
I think it's probably a reasonable question though. The concept of commutation is discussed in the source text and the answer contains things that are also familiar so I think I'll probably leave it in the quiz.
Thanks for the response. I was curious where it came from as I was trying to get more background on the first two non-financial considerations. All the other ones make logical sense to me. Could you expand on how court decisions and life expectancy of claimant would impact the cash flows of a commutation?