XOL Qu Part 1 Q&A

G'day all,

CT6 Q&A Part 1 - Q 1.30 part iv)

Just wondering why we still multiply by the old retention level (1000) in our equation, even though the limits have been updated to the new inflated level? If it isn't an error, I'd appreciate if someone could help me understand...

Many thanks

 

Without looking at it, I'd guess that this is because the retention limit hasn't changed with inflation, so its left the same, the cost of claims will be higher though due to inflation, which is why the limits change

 

I see the light...

Ahhh...

It is in fact the inflated level (1100), but minus the 100 policy excess I neglected to mention in my last post. Whoops, perhaps I should have slept on it.

Thanks for the reply. I wish I had signed up to this forum earlier

 

No problem.... I'll be joining you in the September 07 CT6 exam, got an FA in it today!

I passed CT4 and CT5 though,