Fall 2016 Q15
www.battleacts6us.ca/pdf/Exam_(2016_2-Fall)/(2016_2-Fall)_(15).pdf
Hi, for Part c additional analysis, I was thinking we could look at Iris Ratio 4, to see if there has been a significant surplus aid. Can this answer be accepted? If yes, how do I further elaborate on this if this question has a higher point?
Comments
The ratios considered are 11 through 13, the reserving ratios. The options offered in the answer key relate to reserving issues. Surplus aid is essentially cession commission and it is related to income. It is unlikely that it would be accepted for this question.
Is there a list of the analyses they have in the examiners report somewhere that you were meant to pull from for this question? It seemed pretty open to interpretation otherwise. My answers for this were:
IRIS 11 and 12 have been deteriorating over time to the point where IRIS 11 in 2015 and IRIS 12 for 2014 and 2015 are all outside the usual range, this could indicate an under reserving is a problem, company should review it's reserving methodology and whether or not it has changed in this time
EP has rapidly increased in recent years, especially between 2014 and 2015 which could mean that UW standards are too low and the company is taking on new business that is riskier than they are prepared to handle. Company should examine their current UW standards and find stricter guidelines for writing new policies
My first answer seems very much in line with "interview management about reserving", so I feel confident enough about that one unless there's something I'm missing, but I'm slightly less sure about #2, I feel like it's a solid answer here but would anyone be able to confirm with reasonable confidence that this would be an acceptable answer?
(2) is not based on IRIS ratios, which is what is asked.
(1) does not offer an indirect way of confirming the indications of the IRIS ratios, which is what they mean by "analysis."
The "analyses" can be found dispersed in the source text.