CAS Exam 6C Fall 2013, Question 11
Study guide: Exam 6C
The Property and Casualty Insurance Compensation Corporation (PACICC) was established to protect policyholders and claimants in the event of an insurer insolvency.
Part a (1 point)
In the event of an insolvency and assuming no payment has been made by the insolvent insurer, calculate the amount of recovery to which each of the following policies is entitled from PACICC with respect to claims:
- i. (0.25 point) An auto policy in Manitoba has a collision deductible of $500. The policy incurred a collision ground-up loss of $20,000.
- ii. (0.5 point) An auto policy in Ontario has a collision deductible of $500 and a third party liability limit of $1,000,000. The policy incurred a collision ground-up loss of $30,000 and a third party liability ground-up loss of $300,000. These two losses were from separate accidents.
- iii. (0.25 point) A personal property policy in Alberta has a deductible of $1,000 and a limit of $1,000,000. It incurred a ground-up loss of $300,000.
Part b (0.5 points)
In the event of an insolvency in the fall of 2013, calculate the amount of recovery to which each of the following policies, both issued in summer of 2013, is entitled from PACICC with respect to unearned premium:
- i. (0.25 point) A fidelity policy in Alberta with an unearned premium of $300 as of the date of insolvency.
- ii. (0.25 point) An auto policy in Alberta with an unearned premium of $1,500 as of the date of insolvency.
Part c (0.5 points)
Briefly describe the two conditions that must be met before PACICC has financial responsibility in connection with an insurer's insolvency.
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