S
Shandz
Member
This question is in the 2nd tutorial handout given to me as part of 3 day regular tutorials for ST1.
The question asks you to work out the unearned premium reserve (UPR) and the additional unexpired risk reserve (AURR) for PMI as at 31/12/2010. You are told that premiums of £900,000 were written in 2010 and that policies are annual and commence on 1st July each year. You are also told that claims inflation is 10% pa.
In the answer the calculation of the URR considers considers claims outstanding at 31/12/11 when working out how far to project forwards when applying the claims inflation of 10% pa.
I don't understand why we wouldn't just consider claims outstanding at 31/12/10 for this bit since surely any business written in 2010 would have expired by 31/12/11. Am I missing something or not understanding something here?
The question asks you to work out the unearned premium reserve (UPR) and the additional unexpired risk reserve (AURR) for PMI as at 31/12/2010. You are told that premiums of £900,000 were written in 2010 and that policies are annual and commence on 1st July each year. You are also told that claims inflation is 10% pa.
In the answer the calculation of the URR considers considers claims outstanding at 31/12/11 when working out how far to project forwards when applying the claims inflation of 10% pa.
I don't understand why we wouldn't just consider claims outstanding at 31/12/10 for this bit since surely any business written in 2010 would have expired by 31/12/11. Am I missing something or not understanding something here?