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Frustration at CP3 April 2022 Paper

D

dannyp123

Member
Hi,

Not sure the best place to write this, so thought I would start here. I just sat the April 2022 CP3 paper and I am pretty frustrated about it. The common message repeated in all the exams is that you do not need knowledge outside of the material provided. The exam should be able to be written based purely on the material provided (advanced material and the exam question itself).

I've done pretty much all the past papers and this has always been the case, but I feel that it wasn't for this exam. Maybe it is just me missing something (very possible). So, the main thrust of the exam was that shareholders were concerned about the finances of the company due to the ranging impacts of a pandemic. The primary question was this:

The shareholders had seen that in the year before the pandemic the company had set aside capital to cover the cost of the risk of a pandemic. So they were confused as to why losses were evident and the solvency ratio had reduced because if the company had set aside money to cover this risk in advance, why wasn't the result neutral...

There was nothing in the advance material to answer that question. The material showed that experience had gotten worse, that assumptions had to be strengthened, that different products had responded in different ways...etc which was all normal stuff - but nothing on why a company putting funds aside for a risk wouldn't be able to cover that risk in the event of it happening.

Very frustrating for me. I can think of reasons why that may be the case, but the issue is that I shouldn't need to be putting theories together outside of the material to answer the MAIN question of the exam. That is not aligned with the whole purpose and principles of CP3 - which is supposedly to test communication skills rather than actuarial knowledge.

Again maybe this is just me... it would be good to hear other people's experience of the exam?
 
Hi,

I wanted to check if there any support offered by IFOA on providing grades for Mock Exams. I am seriously looking for CP3 exams as its been multiple attempts and I am not able to clear this exam. Dont know what they want. I cover almost all points they covered in sample solution still the grader don't gave me any mark. It is happening for last two attempts.

I am seriously for someone to mentor/guide me to get through this exam. Your help is much appreciated.
 
Hi - have you attended a CP3 Preparation day tutorial and/or worked through the CP3 Online Classroom? This could well help you to determine which aspects you might not be doing sufficiently well on. If you believe that you are covering the same points as in the sample solution, then it sounds like there are issues regarding the clarity with which your points are being expressed or explained, and/or with the language / terminology being used, and/or perhaps with the chosen structure or flow of ideas.

If you feel that you need further assistance beyond this, please email CP3@bpp.com and we can see whether there is anything else that we can offer or suggest.
 
Shouldn't it be the case that higher available capital will reduce a very bad result to slightly bad result? Because quantum of extreme losses will remain unchanged as they were due to external situations, but due to higher available capital company was able to withstand it without becoming insolvent, but pay the price in terms of reduced solvency ratio?
 
Yes that's right - that's what this exam question is about.

High unexpected claims will lead to a worse result for an insurer, whether or not it had a solvency capital buffer set aside to meet them: the money still has to leave the company to pay those higher claims. And the solvency position will look worse as a result.

However, as you indicate, having such a buffer in place means that the company is in a better position to meet those unexpected claims without a threat to solvency.

[Furthermore, as is indicated in the information provided with the question, the company had to increase its reserves as a result of the higher claims being expected to continue into the future, and this would also would have contributed to the reduced solvency ratio.]
 
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