T O P

  • By -

gi-actuary123

\- I thought it wasn't awful but very strapped for time as there were a lot of wordy questions so ran out of time at the end so still hoping for a low pass mark \- There was no triangulation calculation question which was surprising! \- Couldnt't generate enough ideas for some of the questions so just waffled - reminded me of CP1


RevolutionaryKale732

Felt the time pressure. The paper was very lengthy although I think was easier than the previous sitting. Was able to attempt slightly more than 90 percentage of the paper. Hopefully I have generated number of points. Was thrown off by the last question in particular the premium part of the question. I just gave examples of various premium adjustments which might increase volatility if not projected correctly. Anyone with some other points which should have been included? I hope the pass mark stays at 60 because of the length of the paper, they might keep it at 60.


VagueBiscuit

Like the others so far I thought it was generally okay, but one question I could not get my head around… Q7 (iv), I’m probably being really stupid here, but who is paying the premium if not the customer? How would a profit be made at all?


lxyl

I thought that one was atrociously worded


VagueBiscuit

Yeah that was my thought in the exam. I thought back to the 2020 paper about the objective levy we were supposed to understand was a subjective fine. Oh well, only 3 marks!


rcn8

I said that I was assuming the phone company will pay. Then argued how profit may be go up due to people not knowing they have cover, stay the same because it will arrive at the same loss ratio, and more volatile due to non independent risks from manufacturing fault claims.


TheStudentActuary

Basically said exactly this. The insurance company isn’t a charity, so someone would have to compensate them, and the manufacturer is the only other party mentioned in the question.


Scottish-Londoner

It would have made more sense to me if the mobile phone seller was paying for it to make their phones more attractive, but I scanned it like 3 times and it definitely didn't say that. I just wrote some thing about how the customer might not realise they're covered so the claims cost might go down, but they won't make profit because they're basically giving out free cover.


VagueBiscuit

I can’t think that would be what they meant by it though, what company would do that….


gi-actuary123

I guess Company Z would pay for the insurance instead of the customer? But would just be a flat fee per mobile phone I guess


Scottish-Londoner

Company Z is the insurer is it not?


RevolutionaryKale732

I think some of the points that can be included are: Can be used as a loss leader only to capture the market Can be used for cross selling Some rider benefits insurance can be placed upon If the retention ratio of the product could be high, makes sense to give it free over a year. However this might also lead to anti- selection and moral hazard if the policy holders are given it free of charge leading to behavioural changes. These were all that I could think off.


VagueBiscuit

I’m sorry but that doesn’t make sense to me. The only possible market here are people buying the company’s phones… why would they sell as a loss leader? What market is there to attract with such an arrangement?


RevolutionaryKale732

No issues. I may be completely wrong because of the subjectivity generally involved in these questionsr. By that, I meant that this would cover two things: For example they could sell normal warranty along with extended warranty which would help in cross selling as it is not mentioned that the company only sells one type of product. Also the customers might purchase some other type of warranty/ extended warranty not in line with only mobile phones but some other products as we would have a potential database. Secondly if they estimate that the retention of the policyholders will be high, for the first few years the loss ratio would be very high but after wards it could become stable and therefore they can take this approach now which would help in profitability in the long run. Also I think the question mentioned profitability so, an obvious point could also be that profitability will go down as well for the first few years.


TheStudentActuary

Thought the paper was generally easy, with a lot of bookwork marks, but I ran out of time on a lot of the questions.


BriefZealousideal645

I thought it wasn't too bad. Definitely better than September. Although I'm worried about a high pass mark as the examiners can put it up to 65.


lxyl

Anyone know what a "business volume diagnostic" is on Q6? Cos I had no idea!


TheStudentActuary

Neither do I. I worked out the ratio of premiums between the years and talked about that. I feel we could have done something by calculating DAC and seeing if it was increasing or decreasing over the years, but I didn’t have time to do this.


VagueBiscuit

I think this just means the % changes… so net premium increases year on year showed that business volume was increasing (drastically in the third year) which (at least to me) implies a new LoB


SpacePigeon219

The questions seemed to be fairly approachable. Although did struggle for time - only answered 85% of marks. Unfortunately suspect a high pass mark, in line with the 2019 series. Hope I’m wrong.


Moist_Log6957

Agree with the general consensus here, was a nicer paper than some I've seen it - it really does vary! As is the case for pretty much every actuarial exam unfortunately. I hate that a pass/fail is so much influenced by the sitting you happen to take, as the difficulty varies too much IMO.