Hi, From Chapter 6 Question and Answer Bank, I noticed that there are a few questions on pricing of Reinsurance product. However, there are no materials in the Course notes that cover methods to price reinsurance. How much knowledge are we expected to have regarding reinsurance pricing for the ST7 exam? Thank you.
Could be there for 2 reasons... a) by mistake and it won't crop up --- only ActEd can say b) they are making you think broader about pricing something more unusual. Remember you are on the STs and so should be developing broader skills to apply principles to different scenarios. You can't get by ion bookwork alone at this stage, you must be apply to APPLY.
R/I pricing is in ST8. But there's a fine line to be drawn between pricing a r/i contract, and knowledge of how the contract works (which of course is definitely covered in ST7 too). eg if a question asks you what's the most important thing to consider in a quota share contract, the answer would probably be the loss ratio expected - but is this examining 'pricing' or is it examining how the product works??!
That's right folks. For example, Question 6.18 asks you to calculate the pure premium for a stop loss contract. But is this not the expected claim cost? Hence, it is directly relevant to ST7. And let's not forget about a real life scenario either. A reserving actuary would look pretty silly if he / she got the heebyjeebies every time pricing is mentioned. We have to be confident thinking about both.
