The question is on page 6 and the answers are given on page 31. I have a small question about the fourth assumption given in (ii) of the question. It says: for the ACPC approach, we assume that the cost of claims settled given in the question represents the actual amounts paid out so far on these claims. I have trouble understanding why this assumption is needed. Could you please kindly explain what would happen for example if this assumption is violated? Thanks in advance!
The assumption is made because the exam question doesn't explicitly state that the claims had been paid - it just says "settled". It could be that the claim amount had been agreed but not yet paid. So the statement in the ASET is more of an exam technique rather than a technical requirement of the ACPC approach.
Hi Steve, Thanks a lot! Sorry English is my second language and I really failed to see the difference between "settled" and "paid".