• 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.

Sept 15 Q2 ILF inflation term

P

ProCyclist

Member
Quick q for anyone able to help!

Given the ILFs are appropriate on 1/1/2012 and we will write the reinsurance policy on 1/10/2015 I can see why the inflation factor is 1.06^(3.75). However when I saw the question first time I would have assumed that the period would have been 4.75 as the average policy would be incepted 6 months after the start and the average claims on those policies would occur a further 6 months later i.e. 1/10/2016.

I used this assumption and carried on with my calculation and naturally got a different answer.

So my question is would i have been able to get any marks under this assumption? does the assumption even hold or am I missing something?

Thanks!
 
The clue is in the question. The ILF is for contracts written on 1 Jan 2012. So for a contract written on 1/10/2015, that's 3.75 years.
 
thank you morning crescent for the swift reply! much appreciated:)
 
I have a different question about Sept 2015 Q2 which is confusing me. For the last part of the question, the examiner's solution calculates the ILF for 5m xs 5m as 6.96 – 4.26 = 2.70, which is the answer that I got when I tried it myself. However, the ASET solution goes a step further and divides the new ILFs by the ILF for the basic limit i.e. (6.96/0.804) - (4.26/0.804) = 3.36
I don't understand why this is done.
 
That's an error in the examiners' solution. The Core Reading has since been changed (see formula 3.4 chpt 15 page 24), and ASET uses it correctly.
 
You must log in or register to reply here.
Back
Top