ASET September 2014 Q3(ii)

[edcvfr]

The question is to explain why risk premium reinsurance may be appropriate for a life insurance company that is relatively new to the unit-linked market and has limited surplus capital.

Looking at the solutions, I can only see one point that is made specific to risk premium (as opposed to original terms). Is this correct (i.e. the rest of the points relates to reinsurance in general rather than risk premium as opposed to original terms)?

 

[Darrell Chainey]

I think the last point about difficulty with OT is also specific but yes the rest are all generic. I suppose the question doesn't actually ask for specifics, it's separate from parts (i) and (iii). I reckon they might have also given credit for something about reinsuring the sum @ risk, perhaps instead of the bit about early durations as it would be along similar lines.

 

[edcvfr]

I think the last point about difficulty with OT is also specific but yes the rest are all generic. I suppose the question doesn't actually ask for specifics, it's separate from parts (i) and (iii). I reckon they might have also given credit for something about reinsuring the sum @ risk, perhaps instead of the bit about early durations as it would be along similar lines.

Thanks!