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Tutorial handout 2 Ques 3

F

freebird

Member
Hi, I dont understand a few things in the workings provided

1. Workings for the cat loading
2. Where are we using the inflation info provided in the question?
3. Are we not supposed to capture the incidence the expenses paid when we apply the office loadings?

Thanks in advance!
 
The cat loading: We just did something very simple - assumed it happened once every 6 years (ignored inflation), and just added the yearly claims cost to the risk premium.

The inflation info (RPI index) was used to put claims and exposure on-level at the start.

Yes, ideally we'd allow for the timing of all cashflows, eg expenses etc. But again, it's very simplistic, and everything was short-tailed, so we chose to ignore it this time.
 
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