Please provide me question paper for IRDA, Insurance Institute of India, Foundation of casualty Actuarial Science, Part I Examination ?

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j 1. A non-life insurer is planning to develop a new‘product. To produce appropriate
r premium rates which of the following methodis likely to be. used? ' /
A A
B
C 1
D
2 Which of the following is not an allocated Loss Adjustment Expenses '
A
UOUTJ
3_ the context of reserving for allocated loss adjustment expenses (ALAE)
v Which of the following statements is incorrect?
A
B a
C
D
4 An insurer has, in a certain class of business
Number of exposures ' 100
Premium Per policy 7500
Expenses per policy ~ 400
Margin for profit + contingency 10%
Investment Income 45000
_ None of the above
particular large claim
- Rent for the office space used by cl'aim department
7 Outside legal counsel
yCOmbining ALAE with losses is similar to combining two non-
- homogeneous lines of business '
' Total Marks = 100
Pure premium method . >
Paid or incurred loss development method
Loss ratio method ' _
Expenses in connection with appointment of an investigator for a
Court costs
We may include ALAE with losses, and estimate the total liability
It is a statutory requirement to deal with ALAE and losses separately
while determining the liability ,
It is desirable to treat ALAE and losses‘separately for monitoring actual
experience against projected experience for each component
Av claim size ‘ 150000
underwriting profit/(loSs) of the insurerlfor this class is :
5000 '
B 1 - 70000 I v .
1 C - 40000 ' ‘ p \
If the above insurer (in Q1) had written 10000 policies and claim size was a
‘ uniform 120000. The insurer will not have underwriting loss so long as the
number of claims docs not exceed underwriting profit/(loss) of the insurer for
this class is: ‘ a > ‘
AI 21
B 18
C ‘19
D 20
‘ Which of the following statements is incorrect?
Large insurance companies require reinsurance because
A They may write very large or unusual risks
B They may be prone to significant accumulations
C They haVe a diversifiedportfolio
D- They may have very volatile claim experience
Which [of the fellowing statements is incorrect ?
A. ~ Unexpired risk reserve (URR) is the name given for prospective
assessment of reserve needed to cover unexpired risks ' '
B URR is effectively the same as unearned premium reserve (UPR)
C If URR differs from UPR, reserve to be set up is the higher of the two‘
D If URR differs from UPR, reserve to be set up is the smaller of the two
Which Line of business, (below), can be expected to show lower variability of
pure premium ? - ' Y '
A line of business characterized by low frecjuency-high severity
A line of business characterized by high frequency-low severity
A line of business characterized by high deductibles
A line of business characterized by low commission rates
11
Given the following information :
Written premium 1 1540000
Earned Premium 10832000
Incurred Losses & ALAE 7538000
Incurred ULAE 484000
Commissions 173 1000
Tax on premiums 260000
Acquisition costs 646000
General expenses 737000
The targetLoss ratio is given by (1-V-Q)/(1+G) where
V = premium related expense factor
Q = profit & contingencies factor ~
G = ratio of non-premium related expenses to Losses
The calculated target loss ratio is :'
A ,
B
C
D
66.5%
67.5%
61.4%
58.0%
Which of the following is (are) example(s) of'retrospective experience-rating?
"A
Profit sharing, where the insurer charges a higher initial premium, and
returns some profit to policyholders whose claims 'are lower than
expected. 7
The policyholder pays an end of year adjustment premium to reflect the
amount of exposure during the year (e. g. as in employer's liability).
As for l, but the adjustment is based on the insurer's overall experience for
all policies of this type. -
_ A system where a policyholder's next premium is the average of the
insurer‘s book rates and the policyholder's average claims cost over the last
‘ year.
Which of the following statements is incorrect ‘?
A
B
C
D
Loss Development method is not suitable for a new line of business
Loss DeVelopment method produce unreliable results for a volatile line of
business ' .
Loss Development methOd produce results which are stable from year to
year ‘ >
Loss Development 'method produce results which are not stable from year
to year
12 One practical consideration in selecting rating variable is the avoidance of
extreme discontinuities. In this context which of the following statements is
incorrect? ' i
A Wide discontinuities act as incentive for the insured to cheat the insurer
B Cost of verification will be very high with fewer classes
C Insurer must construct gradual changes‘in rates
D For credibility purposes there may be fewer classes worth widely varying
rates -'
13 The correlation coefficient between two variables x and y 'is r. Which'of the
following statements is true?
A O < r < l
B 0 < = r < = l
C -1 < r < ‘1
D -1 <= r <= 1
14 Which of the following statements is incorrect? '
A "Casuality" implies an intuitive relationship to insurance costs
B "Casuality" implies a closer relationship to costs than correlation
C From an actuarial point of view correlated variables provide more accurate
- premiums ' '
D Eliminating correlated non-casual variables may produce a more accurate
rating system.
15 Which of the following statements is incorrect?
Some attributes of a good Individual rating system are:
A They serve the needs of the organization
B They appropriately balance risk sharing and risk bearing
C They are capable of internal manipulation
D They are easy to understand
ESSAY-TYPE QUESTIONS (All questions carry 10 marks each)
16 Write short notes on :
~ (i)
Poisson distribution
(ii) Credibility of data in the context of risk classification
(iii) Experience rating (credit)/debit
(iv) Reserve discounting
5
17
18
19
20
Explain how to measure the variations in the costs among the insured
population
Describe the various prospective rating systems?
Explain the terms "Paid Loss Development Factors", "tail-factor" and their
application in loss reserving. ' '
The Pure premium method provides rates which are expected to provide for the
expected losses, expenses and expected profit based on the formula
R = P+F
l-V -Q‘
(i)
What do each of the symbols in the above formula represent?
' i (ii) Write down the corresponding formula for Loss ratio method and establish
22
' up the ultimate loss?
the equivalence between the two under consistent assumptions?
Explain in detail the different items of "Loss comp0nents" and how they make
Classify rating variables in automobile insurance into broad categories and
explain how they contribute to cost differences?
The End ....... ..