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SA3 Q2(iv)

S

SA3Musketeer

Member
This examiner's report on this question indicates the premium for the RRP can be calculated as a simple proportion of the original contract premium.

Is it fair to consider only the first loss position here. The question appears to overlook that the original contract pays a max of £5M (1st loss plus 4 reinstatements), while the RPP contract pays a maximum of £1M (4 times 250K limit)?:(
 
it looks wrong to me - but the question wording isn't very clear either way.

But I agree that you could pay five premiums and claim five times on the orginal, but only four of each on the RPP. Hence surely it's a little more complicated than they imply - if not impossible.

Either we're missing something or it should say "with four paid reinstatements"..
 
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