2017 Fall #25 c
in COPLFR.SAO
Hi for c is "relevant comment - reinsurance collectability" a legit answer? I am not seeing it either your or CAS' solution. Thank you for the help.
Comments
I'm not sure I understand your answer. The question is asking what the AA might include in the relevant comments for reinsurance collectibility. But here are some further valid answers in addition to management input, financial strength ratings, and Schedule F:
Cash Flow Analysis: By examining the reinsurer's cash flow, you can gain insights into their financial stability and ability to fulfill obligations.
Legal Environment: Understanding the legal framework of the jurisdiction under which the reinsurance contract is written can indicate the ease or difficulty in enforcing reinsurance contracts.
Historical Data: Past behavior can be a good predictor of future performance. Reviewing the timeliness and completeness of past payments can help assess future collectibility.
Stress Testing: Performing stress tests by modeling various adverse conditions can provide insights into how a reinsurer would cope under difficult circumstances.
Review Underlying Assets: Checking the quality of the assets that back the reinsurer's liabilities can also give you a good idea of their financial health.
Consult Industry Reports: Independent industry reports can offer an impartial view, and can also help you understand how the reinsurer measures up against industry benchmarks.
Peer Reviews: Sometimes, testimonials or reviews from other insurance companies that have had dealings with the reinsurer can provide additional context.
By using a blend of these methods, you can form a more comprehensive view of the collectibility of reinsurance.
Hello! On part C of this question, the Examiner's Report says, "A common error was listing other incorrect sources, such as talking to the reinsurer’s
claim staff, interviewing regulators, or reviewing the reinsurer’s Schedule F, etc." I am confused by the mention of Schedule F here as an incorrect response. This seems contradictory.
The CORRECT answer is to review the primary insurer's Schedule F.
The INCORRECT answer is review the reinsurer's Schedule F.