Seemingly straight forward question on non-linear exposure / intensity. Examiners awarded separate marks for discussing non-linear exposure and non-linear intensity of risk. Surprisingly, the examiners' report does not refer to the technical term "underwriting performance" either directly or indirectly. I thought that this technical term would be given some attention in the solution with the details of - how non-linear exposure / intensity influence the analysis of underwriting performance for this product. In any case, how do I take a call in the exam to focus mainly on non-linear exposure / intensity and not on its influence on underwriting performance for this product?
I'm not sure why you think the examiners have ignored underwriting performance in their solution. The last three sentences of their solution discuss the potential effects of using an inappropriate earnings pattern: distorted performance compared to industry statistics inappropriate premiums other inappropriate decisions, eg sales strategies
