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Ch 1 Q1.7 UPR

S

Snowy

Member
Hi,

I want to confirm how to get the UPR for the second risk:

UPR at 31 Dec 09 for annual policies
Risk started at 0 for policy starting on 1 Jul 09 and increases by a constant linear amount over the policy year.

How to get that there is 75% of the risk remaining at end of 09?
 
Policy starts on 1st July, so there's 1 unit of risk in July, 2 in August, 3 in September, .... ., 6 in December. That's 21 units of risk.

In total for the policy, there are 1+2+3+...+12=78 units of risk.

So there's 57/78ths left, which is roughly 75% (the small difference is to do with 'smoothness' issues - integration would be the exact way to do it - but don't let that concern you).

You'll cover this in more detail if and when you do Subject ST7.
 
Thanks Ian,

I am not sure how much knowledge of ST7 is needed for ST8, or would students who don't have ST7 knowledge mean that they will be at a disadvantage for ST8?
 
Well, of course it's early days in terms of what the exams look like, but theoretically you won't be at all disadvantaged if you haven't done ST7 yet.

The reason we put some reserving stuff in the early chapter of ST8 (and similarly, we put some pricing stuff in the early chapter of ST7) is just so that students are vaguely aware of what's covered in the other subject. A detailed knowledge isn't required.

Best of luck
Ian
 
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