2018 Spring 26 part a
I want to make sure I understand the solution to part a.
Looking at sample 1 in examiners report.
For contract 1,
The reinsurer will have a 10% loss if they need to pay 40k * 1.1 = 44k.
But, the insurer is retaining the first 60k of losses. So the reinsurer will only have a 10% loss (or more) if the loss is
44k + 60k = 104k or more.
Similar math for contract 2 and 3 to determine if passes 10-10 rule or not?
Comments
Yes, correct.