Buyout question
On the BattleCard about buyouts - why is there an additional assessment for the xs losses in a buyout? Wouldn't the insurer have already paid for that in the premium? Is this like an additional amount for if expected xs losses (at the time of the buyout) are expected to be higher than when the premium was paid at the start of the contract?
Comments
The Fisher text doesn't give a lot of insight into what the loss based assessment would cover. It's likely it would be used to address mispricing issues such as where the loss frequency may have been higher than expected
Sounds good - thanks!