CAS Exam 6 - Memory Tricks
10-10 rule - ANS-If reins has over a 10% chance of a more than 10% UW loss, then danger
transfer exists.
Compare NPV loss to at least one.1 * Reinsurance Prem. If NPV loss is extra, then hazard
transfer exists
3 goals of TRIA - ANS-Stabilize private marketplace
Protect customers - make certain availability / affordability
Preserve kingdom regulation
three mechanisms for country residual automobile insurance marketplace - ANS-1) Assigned
Risk Plan / Auto Insurance Plan
2) Joint UW Association
3) Reinsurance Facility
three Pillars of Solvency II - ANS-QGT (almost like cutie)
1) Quantitative - Sets SCR & MCR
2) Governance - Supervisory sports
three) Transparency - Supervisory reporting & public disclosure
four strategies for assessing threat transfer - ANS-Qualitative - self obtrusive
Qualitative - considerably all
Quantitative - ERD
Quantitative - 10-10
5 steps in interactive rating process - ANS-RM-PDP:
Research
Meeting
Proposal
Decision
Publication
5 sorts of opinions - ANS-REIGN - REIQN
Reasonable (within)
Excessive (above)
Inadequate (beneath)
Qualified (not able to trouble on cloth gadgets however still will be affordable)
None (unable to finish)
6 features of reinsurance - ANS-Cat - SWIGS:
Cat protection
,Stabilize loss revel in
Withdraw from marketplace - facilitated
Increase large line capability
Guidance from reinsurer (expertise in line)
Surplus relief (reduces internet leverage ratio)
7 Core Principles - US Insurance monetary solvency - ANS-POORER-C
Prevention & correction
Off-website online exams (NAIC equipment)
On-website online checks
Regulatory control-risky transactions
Exiting market
Reporting (disclosure / transparency)
Capital adequacy (RBC & other equipment)
Advantages & hazards of surplus allocation in IEE - ANS-Adv: R2DC - R2D2's cousin:
Reinsurance would not distort this
2 years of information enables smooth consequences
Data with ease to be had from AS
Calc is straightforward & can examine co's and LOB's
Disadv: FARCe (may also the FARCe be with you):
Future enterprise / boom isn't always contemplated b/c retro
Actuary / mgmt input now not meditated b/c just components
Risk characteristics of LOB no reflected (quick vs lengthy)
Cat capability not identified
All Risk additives in RBC - ANS-Backwards alpha order + Reserve, NWP, Cat, Op
R0 - Subsidiary Ins Co's; Misc Other
R1 - Fixed Income (Asset)
R2 - Equity (Asset)
R3 - Credit (Asset)
R4 - Reserve (UW)
R5 - NWP (UW)
Rcat - Catastrophe
Op risk - 3%
Arguments in opposition to credit score - ANS-FEED:
Frequency handiest; not severity
Errors (inclu. Identity robbery)
Economic downturn influences
Discriminatory (age, negative, immigrant, ethical / spiritual)
Arguments for credit score rankings - ANS-SMORe (rhymes with for):
Statistical importance
, Manipulation hard
Objective b/c information
Removal may not exchange agg prem
ARP Process - ANS-Assigned Risk Plan
1) Driver applies; rejected by using voluntary marketplace
2) Driver applies to ARP
3) Driver is assigned to insurer - WP % market
Regulator units uniform costs
Insurer absolutely services
four) Insurer retains income / loss
Asset Concentration Charge notes - ANS-ACC - attention in pinnacle 10
Excludes truly safe (US Govt, cash, 01) and max fee (06). Applies to the entirety else. (Applies -
Asset - AA)
Basic charge for Bonds & Preferred inventory + mortgage bonds and coins - ANS-US executive
= zero
Class 01 = .003
Class 02 = .01
Class 03 = .02
Class 04 = .0.5
Class 05 = .1
Class 06 = .Three
Cash & equiv = .003
Mortgage bonds = .05
BEAT Tax - ANS-Alt tax - ordinary Tax is BEAT tax
BEAT tax is a further tax to everyday tax
Calculate regular tax as TBI * .21
Alt tax = 10% Gross Receipts (GWP)
If Alt tax > Regular Tax, there is BEAT tax
Avoids taking advantage of creating tax deductible payments to foreign international locations to
decrease taxes
BLBA - ANS-Black Lung Benefits Act (1969)
Wage alternative / med benefits; absolutely disabled coal miners; was insufficient nation
repayment; fed reduced with the aid of country; funded by means of tax on coal operators; if
deficit, borrow from govt
Bond Size Charge notes - ANS-BSC - Diversification. (BCD)
BSF = Weighted be counted / rely - 1
Apply to basic fee (now not cost) for Class 01 - 06
10-10 rule - ANS-If reins has over a 10% chance of a more than 10% UW loss, then danger
transfer exists.
Compare NPV loss to at least one.1 * Reinsurance Prem. If NPV loss is extra, then hazard
transfer exists
3 goals of TRIA - ANS-Stabilize private marketplace
Protect customers - make certain availability / affordability
Preserve kingdom regulation
three mechanisms for country residual automobile insurance marketplace - ANS-1) Assigned
Risk Plan / Auto Insurance Plan
2) Joint UW Association
3) Reinsurance Facility
three Pillars of Solvency II - ANS-QGT (almost like cutie)
1) Quantitative - Sets SCR & MCR
2) Governance - Supervisory sports
three) Transparency - Supervisory reporting & public disclosure
four strategies for assessing threat transfer - ANS-Qualitative - self obtrusive
Qualitative - considerably all
Quantitative - ERD
Quantitative - 10-10
5 steps in interactive rating process - ANS-RM-PDP:
Research
Meeting
Proposal
Decision
Publication
5 sorts of opinions - ANS-REIGN - REIQN
Reasonable (within)
Excessive (above)
Inadequate (beneath)
Qualified (not able to trouble on cloth gadgets however still will be affordable)
None (unable to finish)
6 features of reinsurance - ANS-Cat - SWIGS:
Cat protection
,Stabilize loss revel in
Withdraw from marketplace - facilitated
Increase large line capability
Guidance from reinsurer (expertise in line)
Surplus relief (reduces internet leverage ratio)
7 Core Principles - US Insurance monetary solvency - ANS-POORER-C
Prevention & correction
Off-website online exams (NAIC equipment)
On-website online checks
Regulatory control-risky transactions
Exiting market
Reporting (disclosure / transparency)
Capital adequacy (RBC & other equipment)
Advantages & hazards of surplus allocation in IEE - ANS-Adv: R2DC - R2D2's cousin:
Reinsurance would not distort this
2 years of information enables smooth consequences
Data with ease to be had from AS
Calc is straightforward & can examine co's and LOB's
Disadv: FARCe (may also the FARCe be with you):
Future enterprise / boom isn't always contemplated b/c retro
Actuary / mgmt input now not meditated b/c just components
Risk characteristics of LOB no reflected (quick vs lengthy)
Cat capability not identified
All Risk additives in RBC - ANS-Backwards alpha order + Reserve, NWP, Cat, Op
R0 - Subsidiary Ins Co's; Misc Other
R1 - Fixed Income (Asset)
R2 - Equity (Asset)
R3 - Credit (Asset)
R4 - Reserve (UW)
R5 - NWP (UW)
Rcat - Catastrophe
Op risk - 3%
Arguments in opposition to credit score - ANS-FEED:
Frequency handiest; not severity
Errors (inclu. Identity robbery)
Economic downturn influences
Discriminatory (age, negative, immigrant, ethical / spiritual)
Arguments for credit score rankings - ANS-SMORe (rhymes with for):
Statistical importance
, Manipulation hard
Objective b/c information
Removal may not exchange agg prem
ARP Process - ANS-Assigned Risk Plan
1) Driver applies; rejected by using voluntary marketplace
2) Driver applies to ARP
3) Driver is assigned to insurer - WP % market
Regulator units uniform costs
Insurer absolutely services
four) Insurer retains income / loss
Asset Concentration Charge notes - ANS-ACC - attention in pinnacle 10
Excludes truly safe (US Govt, cash, 01) and max fee (06). Applies to the entirety else. (Applies -
Asset - AA)
Basic charge for Bonds & Preferred inventory + mortgage bonds and coins - ANS-US executive
= zero
Class 01 = .003
Class 02 = .01
Class 03 = .02
Class 04 = .0.5
Class 05 = .1
Class 06 = .Three
Cash & equiv = .003
Mortgage bonds = .05
BEAT Tax - ANS-Alt tax - ordinary Tax is BEAT tax
BEAT tax is a further tax to everyday tax
Calculate regular tax as TBI * .21
Alt tax = 10% Gross Receipts (GWP)
If Alt tax > Regular Tax, there is BEAT tax
Avoids taking advantage of creating tax deductible payments to foreign international locations to
decrease taxes
BLBA - ANS-Black Lung Benefits Act (1969)
Wage alternative / med benefits; absolutely disabled coal miners; was insufficient nation
repayment; fed reduced with the aid of country; funded by means of tax on coal operators; if
deficit, borrow from govt
Bond Size Charge notes - ANS-BSC - Diversification. (BCD)
BSF = Weighted be counted / rely - 1
Apply to basic fee (now not cost) for Class 01 - 06
