On the solution for part (i) I don't follow two points mentioned: 1.how the period of exposure is from 1/10/2013-30/9/2014 2.how it is determined that half of the incurred claims 'may have arisen from premiums written prior to 1/1/2013' For point one, I thought the period that the 3m loss arises from is 1/1/14--30/9/14 (a YTD figure essentially) For the second point, if we do say the period of exposure is as given in point one, the average claim would occur 6months after, which would be 1/3/2014, would this not corespond to polices written during that period? Which would be after the last premium revision. Thanks,
Hi Ciza5 The question says that the loss arises for the year to 30 September 2014. This will be a full year (1 October 2013 to 30 September 2014) and not just the calendar year to date. General Insurers accounts will normally be prepared on an accident year/1 year accounting basis, so will take into account claims incurred during the year. Hence we are interested in accidents arising between 1 October 2013 to 30 September 2014. Assuming annual policies and on average a six-month delay between policy inception and accident date, then the policies that were written that gave rise to these accidents, were written between 1 April 2013 and 31 March 2014. So assuming that the the risk is uniform over the policy period, approximately half of the incurred claims would come from policies written prior to 1 October 2013 (ie 1 April 2013 to 30 September 2013), which is the date of the last premium revision.
