1. Posts in the subject areas are now being moderated. Please do not post any details about your exam for at least 3 working days. You may not see your post appear for a day or two. See the 'Forum help' thread entitled 'Using forums during exam period' for further information. Wishing you the best of luck with your exams.
    Dismiss Notice

CM2 revision notes booklet 8 (Ruin theory), ST3 Sep 2008 - Q1

Discussion in 'CM2' started by Adithyan, Jul 25, 2019.

  1. Adithyan

    Adithyan Very Active Member

    The booklet states that claim volatility for insurer decreases if retention increases.

    Wouldn't claim volatility increase with increase in retention? Therefore with higher retention limit won
    t the probability of ruin increase for the insurer?

    Please clarify!
     
    Adithyan, Jul 25, 2019
    #1
  2. Anna Bishop

    Anna Bishop ActEd Tutor Staff Member

    Hi Adithyan

    I agree with you on this one, I think it's a typo, should be:

    - the higher the insurer's retention limit
    - the higher the insurer's claims volatility, and
    - the lower the reduction in the probability of ruin.

    or:

    - the lower the insurer's retention limit
    - the lower the insurer's claims volatility, and
    - the greater the reduction in the probability of ruin.

    I will flag this to be added to our Corrections doc.
    Anna
     
    Anna Bishop, Jul 25, 2019
    #2
  3. Adithyan

    Adithyan Very Active Member

    Thank you very much Anna! This was troubling me a lot.
     
    Adithyan, Jul 25, 2019
    #3

Share This Page