Sept 15 Q2 ILF inflation term

Quick q for anyone able to help!

Given the ILFs are appropriate on 1/1/2012 and we will write the reinsurance policy on 1/10/2015 I can see why the inflation factor is 1.06^(3.75). However when I saw the question first time I would have assumed that the period would have been 4.75 as the average policy would be incepted 6 months after the start and the average claims on those policies would occur a further 6 months later i.e. 1/10/2016.

I used this assumption and carried on with my calculation and naturally got a different answer.

So my question is would i have been able to get any marks under this assumption? does the assumption even hold or am I missing something?

Thanks!

 

The clue is in the question. The ILF is for contracts written on 1 Jan 2012. So for a contract written on 1/10/2015, that's 3.75 years.

 

thank you morning crescent for the swift reply! much appreciated

 

I have a different question about Sept 2015 Q2 which is confusing me. For the last part of the question, the examiner's solution calculates the ILF for 5m xs 5m as 6.96 – 4.26 = 2.70, which is the answer that I got when I tried it myself. However, the ASET solution goes a step further and divides the new ILFs by the ILF for the basic limit i.e. (6.96/0.804) - (4.26/0.804) = 3.36
I don't understand why this is done.