mock06 claims analysis

[NeedToQualify]

Hi,

In Mock06 Q2 there is an analysis of claims being done for reinsurance contracts. I'm not sure what the solution is doing.

For non-proportional reinsurance it says that it is checking whether the original reins premiums were calculated correctly : so actual current year data not used?

It refers to the adequacy of reserves and reasons why they proved inadequate: I guess it is referring to the prior years cedant's reserves that were used for calculating the premium.

I am puzzled by the comment that :"I can then compare this with the rate actually charged, although I would take into account whether experience had been unusually good or bad for each type of reins cover"

So, I'm not sure whether it is comparing "actual to expected" or the correctness of the "expected" calculated in the first place (ignoring actual data)

Many thanks

 

[Ian Senator]

In Mock06 Q2

Think you mean Q1...

For non-proportional reinsurance it says that it is checking whether the original reins premiums were calculated correctly : so actual current year data not used?

We're just checking that the reinsurer charged enough as low reinsurance rates may have been the reason for its losses.

It refers to the adequacy of reserves and reasons why they proved inadequate: I guess it is referring to the prior years cedant's reserves that were used for calculating the premium.

Yes. Although the reinsurer may have calculated its own reserves based on the cedant's data.

I am puzzled by the comment that :"I can then compare this with the rate actually charged, although I would take into account whether experience had been unusually good or bad for each type of reins cover"

So, I'm not sure whether it is comparing "actual to expected" or the correctness of the "expected" calculated in the first place (ignoring actual data)

A bit of both. First make sure you charged enough (was the 'expected' calculation reasonable) and then allow for the fact that the experience you've seen may just have been unusual and perhaps the original price was still justified.

 

[NeedToQualify]

Thanks for the quick reply!