Oct 2009 Exam Discussion

I recall that the average premium was close to 231 and something with the higher q value. I hope its close enough to the correct answer!

 

I recalled that I used exponential distribution which was given in Tables. Since exponential distribution has memoryless propery it was simplified to taking the integral of exponential distribution from 0 to 30.

But i did made a mistake of specifying the prob of ruin rather than prob of not ruin

 

I agree with both of you. I did got stuck upon various question particularly time series questions, Q1 and Q8, and the question of credibility theory and loss distributions. The question to find the estimated parameters of lognormal distribution using method of percentiles was also tough.

I notice questions were more trickier than last few sittings and moreover were time constrainted

 

What was the value of full premium?

 

I think it was 350

 

I agree, it was somewhere around 350.

 

As far as I know, it depends on the difficulty level of the exam. I suppose pass marks must be close to 60%

 

I used normal approximation however, I would appreciate if someone from Acted comment on the right technique of solving the problem

 

What did you guys do in the last question's last part? I tried to solve the problem twice but I am not confident.

 

I think it stated that the insurer paid the amount of each claim that followed an exponential distribution. In addition to that, 50 had to be paid for each claim above 200.

 

What was the form of "k" in terms of q? Any clue on that? I think I was able to bring the policyholders' distribution in terms of k but then did something wrong with the calculation of average premium stuff. My answer was quite higher as compared to the 178 value of avg premium for low risk policyholders.

the transition matrix was like :

q 1-q 0

q 0 1-q

q2 q(1-q) 1-q

 

The expected value was the product of lambda and expected value of Y.
Expected value of Y = Expected value of X + 50 (integral of f(x) from 200 to infinity)

 

Any comments on whether to include the incurred claim values while calculating reserve?

 

I got the answer to part (a) as 1/(1+y)

Could someone please confirm this..!

 

I seriously doubt that this question is ambiguous as the given claims were on incurred basis while the paid claims were not given on the other hand..

I just read in one of the older threads that we can write to the institute regarding these kind of ambiguities on Student Consultative Committee but that link is not working..

 

Could someone please confirm if the probability was coming too high for turning point test..??

 

Mine transition matrix was same as that of yours

 

I applied the same method for E however calculating V was a bit tricky

 

My matrix was the same also. I couldn't get the average premium to equal their value of 178 either - is there anyone that could?!

 

I don't think we were required to confirm the value of that premium for low risk policyholders, nonetheless, it would have verified the preceding calculations. What was the expression for "k" any idea? I think it was something like :

1/(1-q+2q2-q3)

 

IOA has released the exam paper

http://www.actuaries.org.uk/students/exams/preparing/exam_papers/2008_papers2