The example solution includes the statement “ we have made some assumptions about the health of customers and likely death rates”. Where in the question paper or the advanced material, is this mentioned? Are we not supposed to only use information that is given in our response?
Hi, Lapse rates of 5% per month, a loss ratio of 50% etc are mentioned in the question paper on Page 2. Further assumptions regarding the product design are mentioned in the advanced scenario material.
I’ve read the paper and scenario material. There is no mention of mortality rates anywhere. Also no definition of what a valid claim is.
The loss ratio is reflective of what would be the likely experience. Higher loss ratios are reflective of higher claim payouts. Valid claim is what would fall within the T&C of the policy as claim underwriting would occur before a claim is paid out. Exclusions are present in the advanced scenario material.
So they re testing if I know what a loss ratio is? I thought it was a test of my ability to communicate.
Regarding your first point: The assessment draws upon, though not exclusively, material from the core modules and will be set in an actuarial context. So, things like loss ratio is something which is learnt across CM/CS/CB/CPs. Regarding your second point: CP3 builds on the idea that actuaries, while working in technical and specialist environments, will often have to provide written communications to non-specialists. So, for sure, it tests your communication skills but to communicate you need to read well the context and understand the implications from Actuarial perspective in order to communicate it effectively. Have a read at the IFoA's communication guide. Both of these points are from the CP3 syllabus. Best wishes for your exam.
