2010 specimen Q2(iii)

Discussion in 'SA3' started by Ppan13, Jul 16, 2021.

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  1. Ppan13

    Ppan13 Very Active Member

    I’m not sure if I’m missing something blatantly obvious here (as I can’t find an existing question on the forum about this), but in the 2010 specimen paper, the answer to the last question 2(iii)(b) has one point which I can’t make sense of. The examiner's solution says, “Health Hazard is more dependent on latent claims (IBNR) as low ratio of paid claims to case reserves therefore expect a bigger difference between best DMT and high DMT”

    But when I look at the table in the question, Health hazard has the HIGHEST ratio of paid claims to case reserves amongst the claim types, i.e. 0.8 : 1 for Health Hazards compared to just 2.7 : 12.8 for Asbestos. Or flipping it round, health hazard has the lowest survival ratio.

    Is the point they are trying to make that the IBNR for health hazard implied in the table is too small? I fundamentally don’t understand why the examiner was expecting a “bigger difference between best DMT and high DMT” on health hazard. :confused:
     
  2. Ian Senator

    Ian Senator ActEd Tutor Staff Member

    Yes, I think you're right. I suspect they didn't mean that the ratio looks low compared to other claim types, probably just that the ratio (0.8:1) is just low generally, implying more claims yet to come, and so maybe the gap between best and high could be bigger.
     
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  3. Ppan13

    Ppan13 Very Active Member

    ok. Thanks for your response and opinion.
     

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