in Q1, Mock Exam, re the expense ratio involved in the calculation, it's defined as the ratio of expense paid to written premium, and it's the same definition in Chapter 27. However, in the real work of GI company, as far as I know, it's usually referred expense ratio to total expense (net of DAC) divided by earned premium. So, my question is that, for such kind of question if in a real exam, may i treat it as the ratio of total expense to earned premium with explicit explanation? can that way earn full marks related no matter the different result?
Hi Smith Different companies may have their own definitions for how they calculate certain ratios internally, but to be on the safe side for the purposes of the exam I recommend that you stick to the definitions given in the Core Reading as they will be the ones that the examiners are expecting you to use.
