"Outline the adjustments required to the insurer’s data, in order to set the correct risk premiums for a new compulsory excess level of £300." Why did they mention the regulator adjustments (such as claims inflation and development) and not just the extra part which is needed for the change of excess? Those adjustment should have happened already when they prices for a 250 excess and aren't needed here. I keep misunderstanding the questions and losing points since the question aren't clear enough. Any tips??
Hi Jonathans, I think the clue is that the question asks for adjustments to the data (to set risk premiums), sort of hinting that it's more than just an adjustment to the existing risk premium. Misunderstanding the question is a common problem in these exams. If the question really isn't clear, the examiners will take this into account when finalising the marking schedule, and give credit for alternative valid approaches. The problem comes when you're the only candidate to interpret a question a different way, in which case you'll probably be unlucky! Best of luck Ian
Thanks Ian! Follow up question - what wording in this question A 2017 Q7 could let you understand that they meant the whole process of developing claims etc' and just the simulation part: they write to "model" - from my understanding data preperations aren't part of the answer but what am I getting wrong here? and it looks like I wasn't the only one understood it like this: I guess what i'm asking is how I find these "hints" (since they aren't clear in the questions) of what they are expecting in the answer....
Take a look at Chapter 12 section 1.2. You can see that any modelling question could include all these steps, and it's a good rule of thumb to discuss the overall process unless they tell you not to. You'll be amazed how many questions have marks available for these wider ideas.
Thanks! Another question I found very unclear maybe you could please expain to me: (S 2016 Q 11) what do they mean by "approaches" ? I feel like I am not the only one who doesn't understand this question.
I think any question that asks for things like "approaches", or "steps", or "a process", or "method" is basically asking "how would you do this". So you can probably approach these as you would a modelling question. You'll see the examiners suggested this too.
