Actuarial Outpost SOA #27
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#1
07-03-2012, 08:22 PM
 zhaoc033 Member CAS SOA Join Date: Sep 2010 Studying for FAP Posts: 107
SOA #27

the solutions says E 3L | K42 > 3] = 1000 A45 - 1000 P40 - 1000 P42 a42
Why does this formula apply here? Is there a chapter in ASM i can refer to for this formula?

Thanks
#2
07-03-2012, 09:04 PM
 Gandalf Site Supporter Site Supporter SOA Join Date: Nov 2001 Location: Middle Earth Posts: 26,452

Quote:
 Originally Posted by zhaoc033 the solutions says E 3L | K42 > 3] = 1000 A45 - 1000 P40 - 1000 P42 a42 Why does this formula apply here? Is there a chapter in ASM i can refer to for this formula? Thanks
If you read the problem, you'll see that the premium structure for that policy is extremely unusual. There is no chance ASM will have the specific formula for such an unusual insurance. ASM should tell you what 3L means and how to approach calculating an expected value of 3L for pretty much any insurance. It would be in a chapter on reserves probably.

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