• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Reinsurance

M

misterh

Member
Part of Q&A Bank 3.3 (ii) solution: "Risk premium (RP) reinsurance is often based on the sum at risk and so would specifically target the mortality / morbidity risk. This would therefore usually be more suitable for protection products, unless reserves are small."
I don't follow the "unless reserves are small" part? Aren't most low cost protection policies set up so that their reserves are small? Isn't that the point of using RP on these where we have higher amounts at risk?
I know this is ST2 ground and if the exam was in 2 or 3 months time I'd go digging but unfortunately don't have the luxury...
Any help would be much apreciated - thanks
 
Errrrmmmm, if reserves are small, then SUM AT RISK would remain relatively stable. Hence there would be no need to target the sum at risk, you could just target the sum assured.

Hope it helps
 
Back
Top