Estimating liability outgo

[thistleandspice]

Here's a quick question:

When talking about estimating liability outgo, should we include a discussion of premiums?

The core reading gives the formula:
overall liability outgo=
claims
- reinsurance/other recoveries
+ expenses
- premiums
+ tax and dividends

Hence, the premiums are part of overall liability outgo, but just a negative outgo (or income!).

However, April 2008 Question 4 (Describe how you would project the various components of the existing overall liability outgo for a motor portfolio in each future time period - 13 marks) says in the answers:
"Even though the question specified liability outgo, many students wasted time writing about premium and investment income"

So which is right??

 

[Katherine Young]

Dear Thistleandspice,

Yes I don't like it either I'm afraid.

I think the safest route, if you're unsure next week, is not to second guess what will be on the marking schedule. Once you think you know what the question is asking for, don't dither about whether or not to write something down, just write it down anyway.

Good luck!

Katherine.