Question1:
Could you please help me to understand what exactly do we mean by Claim Incidence rate and Claim inception rate?
Is there any difference between the two?
Question2:
In chapter 13 on page 8 core reading states that:
If a formula model, as described in earlier subjects (eg Subject CM1) and in Chapter 11, were
being used for pricing, the last two approaches above are not available and the risk of
adverse future experience would be allowed for by taking margins.
For the formula model as per my understanding, we could apply only third approach i.e. risk element of the risk discount rate.
But as per core reading, only 1st approach is applicable.
Could you please help me to understand this concept?
Thanks
Vatsal Gupta
Last edited by a moderator: Jan 8, 2022