Fall 2016 Q25 ii
Hello,
The answer I gave was not explicitly mentioned but I tried saying that ii did qualify as risk transfer because there is a chance of a CAT in any given year. So even though the ERD was not below 1%, I thought we could apply the self-evident rule. Do they have to explicitly say it is a CAT contract for can we make that assumption if it is not stated?
Comments
Catastrophic events, like hurricanes or earthquakes, are effective on Property lines, but not on Liability lines. You would need to further state that you are assuming it's a Property contract.
With these assumptions, that answer may be correct. But it is obvious that they want you to work the .9% ERD given by using the ERD method.