• 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.

September 2013 Question 2 (iii)

  • Thread starter Euodia Vermeulen
  • Start date
E

Euodia Vermeulen

Member
Hi

I have a query with regards to Question 2 iii in the September 2013 paper.
It states that the “quotes are 50% higher than the average unadjusted annual historical cost over $50m over the last 20 years.”

So the reinsurer is basically valuing the burning cost 50% higher than the company/captive did.

However, in the examiner’s report it does not refer to any add ons that the reinsurer may charge e.g. profit, commission, risk margin, etc.
Shouldn’t these also be considered in your answer to explain the 50% higher quotes?

Thank you.
 
We thought so too. This was queried with the examiners at the time, who told us that since the quotes are a multiple of the burning cost, rather than being based on market rates, factors like loadings and the underwriting cycle will not be relevant. We weren't entirely convinced by that explanation, as we think most students will have interpreted the question as you have done.
 
Back
Top