Claims Inflation for different classes of business & core reading questions

[Thamar Curgenven]

Hello,

I have a few questions:

Exam papers
I have noticed examiners expect us to know claims inflations for different COBs, (i.e September 2013 Q8 iii). I don't have much experience in these so it would be useful to get a list of each COB and their corresponding claims inflation.

Core reading
Chap 23 1.3 (page 4): Why do we want to reduce NWP relative to free reserves?
Chap 27 6.7 (page18): Why does regulation mean companies won't benefit from economies of scale? What do they mean with 'anti-competitive legislation'?

Thank you in advance!!

 

[Darren Michaels]

I think the best way of answering the first query re inflation would be to ask some colleagues in the pricing/reserving teams at your organisation as to what they are currently seeing in the market.

Core Reading questions:

1. This is the definition of the solvency margin/ratio - see Chapter 26 page 14
2. Larger more complex companies writing multiple lines of business may often have to spend more time complying with regulatory requirements than small ones, hence there is no economy of scale from being bigger (eg compare a small monoline company with a multi-national company writing many different lines of business, the latter would need to consider correlations etc)
3. Anti-competitive legislation protects consumers against business practices that would otherwise reduce competition in the market, eg it may prohibit a merger between the two largest insurers in a country, as that might create a monopoly and would lead to less consumer choice/competitive practices/prices etc.