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When attempting this question please keep in mind the notation in the examiner's report is that used in a previous reading which is no longer on the syllabus.
In this problem we have both a per-occurrence limit and an aggregate limit (impl…
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In the BattleActs material the section you should reference is https://battleacts8.ca/8/wiki/index.php?title=Fisher.ExpRatin…
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This question is dealing with aggregate claims rather than just claim severity or claim frequency. Although we're given a severity trend of 20%, since the excess layer is fixed at 500k excess of 500k, there is an implicit frequency trend as well …
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Technically, the solution says "The result from the new business model can be added into the renewal model as an offset".
This means we set up another model ("the renewal model") which will reproduce the behavior of the new business model …
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This is an example which shows the list of functions is incomplete. If you go into the sample spreadsheet and type =Match( then you can start using a match function as you would in Excel.
Try the sorting the following using an index match. …
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I'm assuming you're referring to determining the cash flow for the retrospective rating plan at 18months.
Remember, a retro plan pays for all losses as follows. It charges a fixed amount for the expected excess losses (those over the chosen…
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To apply this formula we first need to know the expenses associated with the guaranteed cost plan. These include ALAE, ULAE, general expenses, other acquisition expenses etc.
We then express these expenses as a percent of the guaranteed co…
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You can use either 0 to R or 0 to F(R). What matters is you carefully note the terms of the limit. In the first case you're saying x goes from 0 to R, whereas in the second case you're saying F(x) goes from 0 to F(R). It's the classic Calc II swi…
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It's probably best to think of all excess insurance as being a form of SIR. It all depends on whose perspective you're looking at. The insurer offering the excess insurance doesn't care (much) about how the policyholder is handling the retained l…
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Hi,
In this situation "excess insurance" is a bit more general. It does refer to a Self-Insured Retention but also refers to any insurance where the layer being insured does not start from the ground up. The primary insured could have chose…
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Holdbacks and loss development factors are almost always used in incurred retro plans. A holdback provision means either the timing or the size of the retrospective premium adjustments are limited. For example, if at the 18-month adjustment a ret…
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Yes, stating it the way you do above would likely have cost around 0.25 to 0.5 points on the exam because the CAS says in the examiner's report "clear identification of the impact of the aggregate and occurrence limits".
Assuming you correc…
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As far as we know there's currently no functionality for graphing in the Pearson environment.
Probably the worst the CAS could try is asking you to produce a table of values which could be used to make a graph.
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What we're trying to do is clean up the graph that has the working residual on the y-axis and something of interest on the x-axis. That something of interest is a continuous 'variable' such as the linear predictor, a particular variable of intere…
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A hinge function is defined by max(0, x-a) where a is a constant called the break point.
The hinge function is 0 until it reaches the break point and then it's the linear function x - a
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The CAS/Pearson provide a list of Excel functions (download using the menu on the right here: https://home.pearsonvue.com/cas) but no guidance as to whether they're appro…
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Excel uses the sample variance formula that you show but with one crucial difference. I strongly encourage you to explore the following within Excel.
When you use Var.S(range) Excel applies the above formula to the range, treating each cell…
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Hi,
The choice of words is unfortunately confusing but the good news is you are very close. You should basically ignore most of the words to focus on "the layer between 1,000 and 3,000" and think of this as an excess layer from a to a + L. …
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Hi,
Using the example on page 20 of the Fisher text, if the guaranteed cost premium is $1,000,000 and the multiple is 1.25 then the aggregate loss limit is whatever loss amount results in a maximum premium, G, of $1,250,000. How we calculat…
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Hi,
In this situation it's helpful to think about how a retrospective rating plan compares to a large deductible plan and then think about the language used to describe the various pieces being priced.
A large dollar deductible plan h…
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The examiners report is correct. It's helpful to think about timing when it comes to experience rating. Remember, we are not trying to recoup past losses but instead reflect how well that past experience reflects the future loss experience that i…
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Hi,
In short, yes! We'll update the wiki soon but in the meantime hopefully what follows will help clear things up.
Reading these tables is tricky so let's start at the beginning. If you're given a risk's occupancy class and sprinkler…
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When we have a split loss plan the primary loss portion represents claim frequency while the excess portion represents claim severity. Since the excess portion is generally driven by relatively few but large claims, it is essentially somewhat ran…
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Great question - reinsurance contracts are highly customized between the reinsurer and primary insurer but in general the profit commission percentge is not negative. The Clark paper doesn't make any mention of allowing a negative profit commissi…
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This is due to the law of large numbers. https://en.wikipedia.org/wiki/Law_of_large_numbers
A 6-month policy and a 12-month policy may have the s…
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Hi,
To prove the CDF for the diminishing deductible you should think about the various payout intervals and apply conditional probability to ensure summing to 1.
I'll show the second case, where the payout, x, comes from a loss that r…
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I think this question is okay where it is because it should be taken in the context of parts d and e which are about deductibles. Calculating a guaranteed cost premium is something the CAS assumes you know how to do by the time you reach exam 8. …
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Okay, based on your feedback we've added all of the Battlecards to the Full BattleQuizzes. The ones that previously weren't showing are now labeled with Qz-10.
We'll keep it this way for at least the rest of this sitting and welcome everyo…
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Thanks for the feedback, at the moment the Full BattleQuiz feature for Exam 8 groups of all the mini BattleQuizzes within a wiki article. We're trying to keep the volume of questions within each mini BattleQuiz to a reasonable number to balance f…
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The primary loss pick is the insured's estimate of the largest per-occurrence loss on a policy. When pricing a policy with both a per-occurrence and an aggregate limit we form the entry ratio by taking the ratio of the policy aggregate limit divi…