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Morrison
03-21-2005, 11:25 AM
Where in the Actuarial Syllabus is the Estimated Current Reserve Deficiency (IRIS Test 12) covered in detail? It doesn't appear to be covered in the Troxel and Bouchie paper (but they do cover all the others).

Is it buried somewhere in the IASA material?

Thanks
Tri4Ben
03-21-2005, 01:47 PM
Where in the Actuarial Syllabus is the Estimated Current Reserve Deficiency (IRIS Test 12) covered in detail? It doesn't appear to be covered in the Troxel and Bouchie paper (but they do cover all the others).

Is it buried somewhere in the IASA material?

Thanks

It is in the schedule P paper and it is pretty important. It takes about 10 minutes to really master that particular calculation and it has been tested about every other year or so...... It was not tested last year........
Morrison
03-21-2005, 02:34 PM
Thanks,

I thought it might be in the schedule P paper, but I didn't see it when I glanced through it really quickly. Now that I think about it, it is probably in the part covering Part 2 of Schedule P.
Avi
03-21-2005, 02:36 PM
Isn't Prospective test of reserve deficency test 11?
Skimbleshanks
03-21-2005, 02:58 PM
I think it's on or near page 41.
blackjack
03-21-2005, 03:11 PM
Isn't Prospective test of reserve deficency test 11?
Was IRIS 11 but now called IRIS 12...or is it the other way around? It's actually called these 2 different names in the current syllabus.
Avi
03-21-2005, 03:22 PM
Was IRIS 11 but now called IRIS 12...or is it the other way around? It's actually called these 2 different names in the current syllabus.
The rediculous one where you take the 1 year and 2 year outstanding loss ratios, average them, multiply by current EP to get projected outstanding loss, subtract current reported reserves, and take that as a ratio to surplus, and fail with a value >25%?

That's calle IRIS 11 this year (Page 41 is correct).

The more accurate test, IRIS 12, calls for the application of gallid* hepatoscopic principles :burn:


* http://www.merckmedicus.com/pp/us/hcp/thcp_dorlands_content.jsp?pg=/ppdocs/us/common/dorlands/dorland/dmd-g-002.htm#998167
lori darling
03-22-2005, 11:28 AM
It is IRIS 12 and referred to incorrectly as IRIS 11 in Feldblum's paper. It has been IRIS 12 for several years now. IRIS 1A and 1B became IRIS 1 and IRIS 2 and thus pushed everything up one.

Also, do not include Reins payable on paid losses in your calculation. The ALL10 manual has several of these examples that include this. This is plain flat out wrong.
islas_del_maiz
03-22-2005, 02:20 PM
In the All10 manual, the 1996 exam question #70 asked to "perform a prospective test of loss and ALAE reserves, as suggested by Feldblum in "Completing and Using Sch P."" The answer key just developed the paid losses and compared that with part 2 numbers. I thought it was asking for the IRIS test 11.

Does anyone know where in Feldblum's paper did he describe the developed paid loss test? Is this a paper version issue (the answer key is based on old version of the paper)?

Thanks!
lori darling
03-22-2005, 03:26 PM
it's a paper version issue. look at the top of page 6: "previous editions of this paper had sections on prospective (actuarial) tests of loss reserve adequacy..."

for that matter, anything related to determining an excess statutory over statement reserve is off-limits too.
islas_del_maiz
03-23-2005, 10:53 AM
Thanks very much! In Feldblum's study guide he has these topics too (triangles, excess of stat over statement reserves), unfortnately. Also, the ULAE allocation stuff, I don't think it's important, is it? The old procedure is simple to know and do, but the new procedure is involved and I would think it's not important enough to be worth many points on a part 7 exam.
blackjack
03-23-2005, 11:02 AM
Doubtful we'll be tested on the new ULAE methodology, as it is long and is also tested on Exam 6 where the Johnson paper is on the syllabus (or at least it was when I took it). Time better spent on other topics.
islas_del_maiz
03-23-2005, 11:04 AM
By the way, it seems all the answer keys to these questions include reins payable on paid losses in calculating outstanding LR. Lori, is this what you are referring to?
lori darling
03-23-2005, 01:32 PM
islas - yes, that's what i'm referring to. been meaning to look up the official answers but all10 shows it this way. maybe they want us to calculate it that way for exam purposes, but it's still wrong.

knowing the old ULAE stuff is easy enough. i'd be familiar with the new method but not too worried about it. yes, johnson's method is still covered in exam 6.
bg23516
03-26-2005, 05:05 PM
The solutions to 2001 - #97 and 2002 #75 both include the reinsurance payable on paid losses in the IRIS test (12) of reserve adequacy. As far as I can find, Feldblum makes no mention of this in his examples. Any ideas where this comes from?
blackjack
03-28-2005, 09:42 AM
See Sch P paper, p. 39
lori darling
03-28-2005, 09:53 AM
what's on page 39? i don't see anything about including reins payable on paid losses.
Avi
03-28-2005, 10:47 AM
Reinsurance payable by the insurer on assumed business is part of the outstanding loss ratio numerator.

Reinsurance recoverable from a reinsurer on ceded (paid) losses are not part of the equation at all.
islas_del_maiz
03-28-2005, 12:36 PM
On the page Blackjack mentioned, it says line 1 includes "reins payable on assumed UNPAID losses and reduced for reins recovarable on ceded UNPAID losses". However, in the exam questions, it says reins payable on Paid Losses. That in fact is line 2, not line 1.

So I think Lori is right that the answer keys are incorrect.
lori darling
03-28-2005, 01:22 PM
i don't know what the deal is with those exam answers including paid stuff. the naic does not define their calcs using paid data either (and has never used it, at least in the past few years, to my knowledge).

my guess is that the difference with including it wasn't enough to change the answer (fail or not fail the ratio), so it wasn't a material issue. regardless, if it's on the exam, i'll just note the discrepancy/confusion.
blackjack
03-29-2005, 07:07 AM
On the page Blackjack mentioned, it says line 1 includes "reins payable on assumed UNPAID losses and reduced for reins recovarable on ceded UNPAID losses". However, in the exam questions, it says reins payable on Paid Losses. That in fact is line 2, not line 1.

So I think Lori is right that the answer keys are incorrect.
You're correct, it says UNpaid...I quickly looked at it

Anyway, according to Kenia (CAMAR instructor for CAS 7), he notes that prior versions of Feldblum's study note had a different definition of this IRIS test which included reinsurance losses payable in the reserve term. He says we should not rely on CAS exam answers using this older version of the paper but instead rely on the 1 on the syllabus which excludes this.

Hope that helps!