#28
For part B,
I understand why there is no timing risk that is clear, but cant there still be underwriting risk and a chance of significant loss? A catastrophe may or may not happen while losses can be as much as 11% satisfying one part of the 10-10 rule (I understand we do not have the probability of loss). Yes the loss is limited but still seems like a chance of material loss.
Comments
Timing risk is a condition that must necessarily be satisfied for it to count as transfer of risk. Once it is not satisfied, the contract is not deemed a risk transfer, regardless of the 10-10 rule.
Ok thank you. The examiner's report stated we needed to list both no timing risk and no significant risk of loss.
That answer is incorrect. It's stated in the wiki answer to the question.