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April 2016 Q 12 (ii)

S

SarahGreenop

Member
Hi there

For the Q12 (ii) in the April 2016 exam, would someone please explain to me why the expected future renewal expense has NOT been added to the prospective reserve calculation before alteration?

I appreciate the feedback.

Regards,
Sarah Greenop
 
This is on account of the reserving basis as stated in the question: Essentially you are calculating a prospective reserve using the office premium
The company calculates prospective gross premium policy reserves for the purpose of
the alteration using the following basis:
Mortality AM92 Ultimate
Rate of interest 6% per annum
Expenses ignore
Future bonuses ignore
 
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