Staff - AC
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In a quota-share reinsurance contract, both the cedent and the reinsurer experience the same loss ratio. If the loss ratio is above 100%, then the reinsurer experiences a loss and it is appropriate to treat it with reinsurance accounting. But rememb…
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Yes, correct.
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The main sources are silent on this question. Yes, the different bases are added together. Schedule P years are "year in which premium was earned and loss was incurred." For occurrence policies, this is the year when the accident occurred. For claim…
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Odomirok's first paragraph in the RBC section provides a cursory overview of the tenets of RBC. You can find more background info on NAIC's website: https://content.naic.org/cipr-topics/risk-based-capital#:~:text=The%20RBC%20requirement%20is%2…
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Yes, they are the same. Werner & Modlin refer to it as 24ths method (see page 60) and Odomirok refers to it as the monthly pro-rata method (see page 37). Its application in this problem is inappropriate. It is meant for the context of having …
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CAL Capital = RBC Capital Required, is correct.
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Yes, correct.
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Mortgage loans fall into R1, both for the Basic Charge and for ACC.
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In page 11 paragraph 3 of the text where Germani describes JUA and RF for workers comp, she does not state whether the high risk is aware of being assigned to the residual mechanism. However, she does state that these mechanisms closely parallel the…
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For all individual accident years, (11) gives the cumulative paid as of the statement date, whereas for the "Prior" year, it gives the amount paid in the statement calendar year on all accident years preceding the earliest individual accident year. …
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As far as I see, the way Germani describes ARP for workers comp is the same as the way Cook describes ARP for personal auto. So, the "stigma" should exist in both of them.
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In my opinion, it is likely that they would count these two as only one, since they both relate to coverage amount. They would want to see another one out of the number of reasons they list.
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You must be looking at an older version. The text linked to IRIS 1 in the wiki gives the usual range. (See the note at the bottom of the Overall Ratios table in the wiki.)
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Sure, good luck.
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To recap, Column 50 is the slow-pay test ratio. If it is greater than 20%, the reinsurer is deemed slow-paying. This is a criterion applied on authorized reinsurers. It determines which one of the two formulas to use for their reinsurance provision.…
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I gather Investment Income Due and Accrued makes up a portion of invested assets and therefore needs to be included in the base of the yield. In the wiki, we did not offer explanations that are more detailed than what is in the text, because that…
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Sure. Good luck in the exam.
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The answer has already been changed to "no trend," as you suggest. Try downloading the file again.
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The text routinely refers to the "R" components of RBC as "risk category," and I don't see a statement to the effect that there are only the asset and underwriting groups of risks. Nevertheless, we seem to have chosen to distinguish risk "categories…
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I don't see this statement in the xaminer report. There is no 2017.Spring.5. Are you looking at 2017.Fall.5?
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We are discussing, will let you know.
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Yes, correct.
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You are correct that it is pre-funded: market participants pay about 1-2% of annual premium in assessments. The statement "post-insolvency assessment can still cause market disruptions . . ." in sample 1 doesn't make sense to me. It is not repeat…
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he fact that the examiners allowed for the different interpretations makes a case that there is no need for further clarification in the Question Bank version.
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They are fairly common. The term "unauthorized" does not mean it is illegal to do business with them. It means that it will cost the cedent more in terms of Reinsurance Provision to do business with them.
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It is included in the Balance Sheet, but does not flow through income. So, it's added on as a credit to surplus in the Capital & Surplus section of the Income Statement.
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Yes, they are the same.
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Bright Line test is conducted to check if there is reason for the financial analyst to pursue the appointed actuary for comment on risk of material adverse deviation (RMAD), whereas this question wants you to evaluate RMAD based on the givens. Plus,…
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I wouldn't go that way, because there have been recent revisions of NFIP to make it more actuarially sound.
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Clayton was the original amendment to Sherman that brought in prohibition of price discrimination. Robinson-Patman further refined Clayton to say that price discrimination was allowed only when used to reflect operational cost differences.