CAS Exam 6C Spring 2015, Question 28
Study guide: Exam 6C
The following information is given for a Canadian property and casualty insurance company as at December 31, 2014. All amounts are in thousands of dollars ($000s).
| Line of Business | Net Unearned Premium Reserve | Selected Loss Ratio |
|---|---|---|
| Auto (excl. Facility Association) | 5,000 | 70% |
| Personal Property | 1,000 | 80% |
| Facility Association | 500 | 95% |
| Item | Value |
|---|---|
| Selected Maintenance Expense Ratio of Premium | 2.5% |
| Selected Internal Adjustment Expense Ratio of losses | 5.0% |
| Selected Contingent Commission Ratio of Premium | 6.0% |
| Unearned Commissions | 200 |
| Deferred Policy Acquisition Expenses | 1,100 |
Loss ratios are discounted according to accepted actuarial practice in Canada.
Part a (2.25 points)
Determine the Deferred Policy Acquisition Expenses that the company will be allowed to book on its financial statements. Fully support your answer.
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
- Facility Association
- Expense Provisions
- Accepted Actuarial Practice