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April 2018 Q2 (iv)

Discussion in 'SA3' started by Adithyan, Jan 12, 2021.

  1. Adithyan

    Adithyan Very Active Member

    This answer I am putting down here is from Examiner's report:

    Under Mix assumptions

    How do you know that the driving history will even out over whole portfolio? Why should it even out?

    How if cars have very specific market, then they can determine avg loadings by model?

    Could you please also explain
    "may be some residual risk selection however if the costs of high risk insurance relative to costs of car make it a material factor in decision making."

    Thanks in advance for the help.
     
    Adithyan, Jan 12, 2021
    #1
  2. Ian Senator

    Ian Senator ActEd Tutor Staff Member

    Driving history: You don't know, which is why they say 'may', not 'will'.

    Specific market: I think they're saying that if it's quite specialist/unique, then hopefully they'll have information that may help with pricing.

    Residual risk: I read this as 'the cost of the insurance compared to the cost of the car may influence the business mix'.
     
    Ian Senator, Jan 14, 2021
    #2

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