CAS Exam 5 Spring 2013, Question 6
Study guide: Exam 5
Part a (0.5 points)
Contrast the components of IBNR for a claims-made policy and an occurrence policy.
Part b (0.5 points)
Explain why a claims-made policy should cost less than an occurrence policy, provided claim costs are increasing.
Part c (0.5 points)
Explain why a change in underlying trends will impact the estimated premium for an occurrence policy more than for a claims-made policy.
Part d (0.5 points)
Briefly describe the provision that exists to eliminate coverage overlap if an insured switches from an occurrence policy to a claims-made policy, and why an overlap would exist without it.
Part e (0.5 points)
Explain why there would be a coverage gap if an insured switches from a claims-made policy to an occurrence policy, and what an insurer can do to provide coverage.
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