CAS Exam 6C Spring 2014, Question 32
Study guide: Exam 6C
Given the information provided below:
Distribution by Line of Business and Geography
Year-ended December 31, 2011 — Gross Written Premium ($000s)
| Line of Business | Ontario | Nova Scotia | Alberta | British Columbia | Total |
|---|---|---|---|---|---|
| Automobile | $120,000 | $23,000 | $50,000 | $0 | $193,000 |
| Personal Property | $32,000 | $12,000 | $21,000 | $70,000 | $135,000 |
| Commercial Property | $18,000 | $0 | $25,000 | $85,000 | $128,000 |
| Total | $170,000 | $35,000 | $96,000 | $155,000 | $456,000 |
Year-ended December 31, 2012 — Gross Written Premium ($000s)
| Line of Business | Ontario | Nova Scotia | Alberta | British Columbia | Total |
|---|---|---|---|---|---|
| Automobile | $150,000 | $24,000 | $52,000 | $0 | $226,000 |
| Personal Property | $33,000 | $12,000 | $22,000 | $72,000 | $139,000 |
| Commercial Property | $19,000 | $0 | $26,000 | $88,000 | $133,000 |
| Total | $202,000 | $36,000 | $100,000 | $160,000 | $498,000 |
Part a (0.75 points)
Identify three considerations in determining the concentration risk of an insurance company.
Part b (0.75 points)
Based on the information provided above, briefly state three key points that should be included in the disclosure of concentration risk in the insurer's financial statements. Assume that the company's rate levels in 2012 were the same as in 2011.
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