April 2006

So, how did you find it?

I thought it was a straight forward enough paper, but I probably didn't do myself justice

My problem questions were the no claims discount question and deriving the exposed to risk equation question. The second half of the paper generally seemed quite nice.

Any thoughts from anyone else?

 

I agree the second half of the paper was ok. I thought the no claims question was quite nice but we did a few of those in my tutorial. REALLY didn't like the last question on the first half though, that was horrible!

 

Which one was that?

And how did the do the no claims one!? How many states did you need to add? I added 2 but was really unhappy with my answer.

 

no claims q

My logic on that one was (if I remember correctly!)

You start with 4 states (0,25,40,50).

For two of those (25 and 40) you can reach them either by having a claim (from above) or by not having a claim (from below). So you definately need at least two more states.

Then you have a choice - you can either (a) assume no new entrants / people enter in one of the states (25,40,50). Thats means you can only reach 0 from above and you're ok. Or (b) that new entrants arrive in state 0, in which case you need two states for 0 - whether you are claim-free or not. That would be three new states.

Either way there's probably no way you can be 50 and have had a claim, but technically you'e still assuming people dont join in state 50 regardless of previous history.

Anyway, I drew a graph with 7 states being (0f, 0c, 25f, 25c, 40f, 40c, 50f), where f=claims free previous year and c=not claims free previous year.

I cant remember the precise wording, maybe they guided you towards a particular set of asumptions but using the logic above you could end up with 6, 7, or 8 states and still be ok.

 

Thanks Mark. How did you find the paper?

 

Ct4(103)

Hey guys,

Before I go on to discuss anything, I think the examiners were very kind to us this time around, in most probability they tried to compensate for the horrendous Q's 5 & 7 in Sept 2005. Apart from Q6, there was really nothing we hadn’t seen before, infact 2 questions on the NCD model caught me by surprise.

Mark, I also went in with 7 states i.e. split 0% discount in 2 levels, but when i came out of the paper I remembered that the question said that 'there are no new entrants', this means that anybody at 0% discount has definitely had a claim in the past year and hence the probability of staying in 0 is .25, hence there is no need to split the 0% level. Again I HOPE I am wrong and you are right on this one.

All said, I have a real good feeling about my second attempt at CT4(103) and considering that I found this to be one of my boogey subjects, I am elated right now.

Hope u guys had a good paper too.
Regards

 

It wasn't as bad as it could of been. Don't really have time to dwell I have my second in a few days.

 

I thought it was a fine paper; a couple of things I couldn't do, but overall both halves of the paper were quiet fair. That could mean there are higher standards though...