F
f888bet
Member
I'm confused by the calculation of expenss per policy.
I agree that if you assume £1 @ 1/1/09, then inflating this for 6 months to the average policy start date, you get £12.74.
However, (n) states that policy expenses are paid 9 months after inception. So, don't you need to discount £12.74 by 9 months (i.e. frrom the average policy inception to get the value of expenses as at the policy start date? This would give expenses of £11.65, & would be consistent with the present value of £852.52 for the claim cost. It seems totally unintuitive to discount the £12.74 by 3 months after the average policy inception!
Am I right in what I'm saying?
I agree that if you assume £1 @ 1/1/09, then inflating this for 6 months to the average policy start date, you get £12.74.
However, (n) states that policy expenses are paid 9 months after inception. So, don't you need to discount £12.74 by 9 months (i.e. frrom the average policy inception to get the value of expenses as at the policy start date? This would give expenses of £11.65, & would be consistent with the present value of £852.52 for the claim cost. It seems totally unintuitive to discount the £12.74 by 3 months after the average policy inception!
Am I right in what I'm saying?