Hello Acted, I am struggling to work out how the Outstanding Claims Reserve (OCR) for the Large Contract has been calculated. In the solution, the OCR has been given as 25% of the difference between the Total Written Premium and the Earned Premium to date. I get it for the small contracts as this information has been clearly provided in the question, but I don't see where the information has been provided for the large contract. Any help would be greatly appreciated. Thanks, Harry
Hi Harry The Examiners have taken 65%-40%=25% of the written premium minus the remaining unearned premium at each point in time . This is the difference between the cumulative incurred claims to date (being 65% of cumulative earned premiums) and the cumulative paid claims to date being (being 40% of cumulative earned premiums). There are some other related posts on the forum which cover this too which you mind find of use - eg: https://www.acted.co.uk/forums/index.php?threads/october-2011-q5.13782/ and https://www.acted.co.uk/forums/index.php?threads/sept-2011-exam-q5-technical-reserves.7664/
