CAS Exam 6C Spring 2014, Question 19
Study guide: Exam 6C
Given the information below for a property and casualty insurance company:
| Line of Business | Net Unearned Premium Reserve ($000s) | Selected Undiscounted Loss Ratio | Discount Factor |
|---|---|---|---|
| Total Auto (excl Facility) | $8,000 | 70% | 0.90 |
| Personal Property | $4,000 | 65% | 1.05 |
| Facility | $300 | 120% | 1.00 |
| Item | Value |
|---|---|
| Selected Maintenance Expense Ratio | 2.5% |
| Selected Internal Adjustment Expense Ratio | 10% |
| Selected Contingent Commission Ratio | 1% |
| Discount from Average Accident Date to the Evaluation Date | 0.98 |
Calculate the maximum deferred policy acquisition costs that the company can record on its financial statements.
Part a (2.25 points)
No current syllabus covers this question; it is kept for the record.
Answer this question and see the worked solution
Concepts tested
- Deferred Policy Acquisition Expenses
- Premium Deficiency
- Unearned Premium
- Insurance Acquisition Cash Flows
- Loss Reserve Discounting