Sept 2011 Q6 vi

Hi,

I recently attempted this question and was a little confused about the answer. The task is to recalculate the claims made exposure for the 2009/10/11 policy years, where the policy only covers claims occurring after 1 Oct 2009.

In the solution, they dismiss all claims from 2007 and 2008 policy years.

I understand why they have done this for 2007, but not for 2008. If the 2008 policy year started on 1 Oct 2008, this means that policies written up until 30 Sept 2009, will fall under this policy year. Some of this exposure will earn after 1 Oct 2009, hence should be included for exposure on a CM basis.

In my attempt, as an estimate, I assumed that if the average policy is written halfway through the policy year i.e. 1 Apr 2009, half of the exposure will relate to the period after 1 Oct 2009, hence should be included.

Is my logic correct or am I missing the point completely?

Thanks,

Ben

 

Hi Ben,

I think by policy year, they meant that the policies would begin earning exposure from Oct onwards. So claims can only occur till Oct 2009 for those written in policy year 2008. Hence we can exclude 2008 from our calculations.
Your assumption of policies being written in the middle of the year is valid when the given information is by calender year(i.e on transactional basis).

Hope I made sense.

 

PY 2008 losses(occuring during 01 Oct 2008-30 Sep 2009) will not becovered by the 2009 claims-made policy.

 

I see - this is the case here because it is an individual policy, not a book of policies relating to the 2008 policy year.

Thanks

 

seppt 2011 q6 vi

In part vi of the same question, would you please explain how the exposure on a claims made basis for 2011 remains unchanged? By the delay table, it should include 25% of the 2009 value shouldn't it? how is it 86.9* .25? That can't include claims before 1.10.2009 too, can it?
and for 2010, by the same logic 50% of 86.9?