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  #811  
Old 09-14-2018, 08:06 PM
hjacjswo hjacjswo is offline
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I wonder if I ordered a wrong version of the study kit or something. The numbers like SAL and stuff are different from what TIA is using in problems. Is it justme?
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  #812  
Old 09-14-2018, 08:34 PM
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I wonder if I ordered a wrong version of the study kit or something. The numbers like SAL and stuff are different from what TIA is using in problems. Is it justme?
I had that issue last time. Make sure you're using the latest years table. Some tables look exactly the same, but are from prior years and have different values in them.
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  #813  
Old 09-14-2018, 08:54 PM
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Meaning as well if the insured has just one loss of 1.5M, the primary would cover 1M and the umbrella would drop down and pick up the excess? That's what I figure but not positive.

Deductible would apply to primary but no additional deductible for the umbrella drop down?
The umbrella picks up the excess losses but it isn’t dropping down. “Drop down” refers to when the primary policy is completely exhausted and you pretend it doesn’t exist any longer.

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If an insurance company sells a 1M/3M policy and also a 3M/3M umbrella, is that equivalent to a 4M/6M policy? (issue with studying in the train is no excel handy)
Think about what happens if there was a $4m claim and then a $2m claim. Who pays what in each scenario?

Also as an aside, umbrella policies have broader coverage than primary policies typically.
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  #814  
Old 09-14-2018, 09:10 PM
hjacjswo hjacjswo is offline
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let me ask a stupid question here. umbrella is basically another name for an aggregate loss coverage, correct? Like the insured has paid out a certain cumulative amount out of its pocket for one or many claims. After this point, the aggregate loss coverage will cover whatever the insured has pay.
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  #815  
Old 09-15-2018, 11:19 AM
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I wonder if I ordered a wrong version of the study kit or something. The numbers like SAL and stuff are different from what TIA is using in problems. Is it justme?
When I ordered Exam 6C study kit, i ended up getting Exam 6U study kit. What a joke
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  #816  
Old 09-15-2018, 11:33 AM
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“Drop down” refers to when the primary policy is completely exhausted and you pretend it doesn’t exist any longer.
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Gotcha
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  #817  
Old 09-15-2018, 03:41 PM
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Again, I have a reinsurance question

Casualty excess of loss - Exposure rating, when ALAE is included with Loss

Exposure factor = {E[x;(AP+Lim)/(1+%ALAE)] - E[x;AP/(1+%ALAE)]}/E[x;PL]

I don't get why the denominator is E[x;PL] instead of E[x;PL/(1+%ALAE)] ??
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  #818  
Old 09-15-2018, 03:43 PM
sticks1839 sticks1839 is offline
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When I ordered Exam 6C study kit, i ended up getting Exam 6U study kit. What a joke
I got 2 copies of the 8 study kit from one order weeks apart. Not the best fulfillment process.
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  #819  
Old 09-15-2018, 04:02 PM
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Again, I have a reinsurance question

Casualty excess of loss - Exposure rating, when ALAE is included with Loss

Exposure factor = {E[x;(AP+Lim)/(1+%ALAE)] - E[x;AP/(1+%ALAE)]}/E[x;PL]

I don't get why the denominator is E[x;PL] instead of E[x;PL/(1+%ALAE)] ??
I wish I had an intuitive explanation. Think of ALAE like inflation and let’s break the exposure rate into the loss only portion times the change in pure premium due to inflation/ALAE (#8 from 2017 exam part b for example).

Loss only exposure rate is: {E[x;(AP+Lim)] - E[x;AP]}/E[x;PL]
Pure perm change from inflation is: {E[x;(AP+Lim)/(1+%ALAE)] - E[x;AP/(1+%ALAE)]} / {E[x;(AP+Lim)] - E[x;AP]}

Multiply the two and the {E[x;(AP+Lim)] - E[x;AP]} terms cancel out. E[x;PL/(1+%ALAE)] is never used.
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  #820  
Old 09-15-2018, 07:02 PM
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I wish I had an intuitive explanation. Think of ALAE like inflation and let’s break the exposure rate into the loss only portion times the change in pure premium due to inflation/ALAE (#8 from 2017 exam part b for example).

Loss only exposure rate is: {E[x;(AP+Lim)] - E[x;AP]}/E[x;PL]
Pure perm change from inflation is: {E[x;(AP+Lim)/(1+%ALAE)] - E[x;AP/(1+%ALAE)]} / {E[x;(AP+Lim)] - E[x;AP]}

Multiply the two and the {E[x;(AP+Lim)] - E[x;AP]} terms cancel out. E[x;PL/(1+%ALAE)] is never used.
Thanks, but I think Mahler's explanation makes more sense to me.
For each claim, Loss + ALAE = (1+ALAE%)*Loss,
so now the average payment per loss in the layer is: (1+ALAE%)*{E[x;(AP+Lim)/(1+%ALAE)] - E[x;AP/(1+%ALAE)]}, this would be the numerator of the exposure factor
The denominator is simply (1+%ALAE)*E(X;PL] and the term (1+%ALAE) cancels out
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