For this opportunity, i am confused. My answer is not permissable since the magnitude (porposed rate change) in Hamilton is 10%, which in lines with regulatory requirements. Isn't it? 10% is acceptable?
If I understand what you're saying, the rules state that in a full filing territorial changes must be in the open interval (-10%, 10%), so strictly speaking, a change of exactly 10% would be outside this open interval. Let me know if that wasn't what you were thinking.
I reread the examiner's solution and I think what they wanted you to realize was that it's ok to change territory rates if they're based on credible data. I don't think they were testing whether you knew the acceptable range for changing territory rates. (It might have been better if they had said the change was 3%, or something that was obviously within the acceptable range.)
It's also likely the rules have changed since 2013, maybe several times. I didn't mark this problem as OUTDATED, but maybe I should. (It would be hard now to find the rules that were in effect in 2013.)
If it were me on the exam, I might say something like: Strictly speaking 10% is not acceptable, but if I were the regulator, I would accept it because it isn't materially different from 9.9999.....%
in the examiner's report, this opportunity lists information to be submitted as
1. exposure distribution by territory & COVERAGE
2. written premium distribution by territory & COVERAGE
and so on..
whereas for opportunity B, it just says by discount. Is this because in the opportunity it only says 10% discount (assuming flat) and doesn't say that this would be varied by coverage?
This is the type of question where you have to answer based on common sense. If you looked at FSCO's detailed regulations, it probably specifies exactly what data you have to submit for each type of change, but there's no way you can memorize all that.
The common sense idea in this question is that you should submit information that will support the change you want to make. Since opportunity B only mentions a general 10% discount, it seems reasonable to focus on discount data when making the submission. If I were answering this question on exam, however, I would be worried about stating that you only had to submit discount data. I probably would also mention coverage and territory just to be safe. It's sometimes hard to predict what the examiner's will accept and what they won't accept as a valid answer, and I don't think they would deduct points for also stating coverage & territory as long as you emphasized the discount data.
Note that the actual candidate answer was much shorter and basically just said to submit exposures and written premiums for groups receiving the discount and for groups not receiving the discount.
Comments
If I understand what you're saying, the rules state that in a full filing territorial changes must be in the open interval (-10%, 10%), so strictly speaking, a change of exactly 10% would be outside this open interval. Let me know if that wasn't what you were thinking.
I reread the examiner's solution and I think what they wanted you to realize was that it's ok to change territory rates if they're based on credible data. I don't think they were testing whether you knew the acceptable range for changing territory rates. (It might have been better if they had said the change was 3%, or something that was obviously within the acceptable range.)
It's also likely the rules have changed since 2013, maybe several times. I didn't mark this problem as OUTDATED, but maybe I should. (It would be hard now to find the rules that were in effect in 2013.)
Thank you for your answer, yea, the only thing i am confused is the range regarding the exact 10% at high end.
If it were me on the exam, I might say something like: Strictly speaking 10% is not acceptable, but if I were the regulator, I would accept it because it isn't materially different from 9.9999.....%
in the examiner's report, this opportunity lists information to be submitted as
1. exposure distribution by territory & COVERAGE
2. written premium distribution by territory & COVERAGE
and so on..
whereas for opportunity B, it just says by discount. Is this because in the opportunity it only says 10% discount (assuming flat) and doesn't say that this would be varied by coverage?
Your reasoning is sound.
This is the type of question where you have to answer based on common sense. If you looked at FSCO's detailed regulations, it probably specifies exactly what data you have to submit for each type of change, but there's no way you can memorize all that.
The common sense idea in this question is that you should submit information that will support the change you want to make. Since opportunity B only mentions a general 10% discount, it seems reasonable to focus on discount data when making the submission. If I were answering this question on exam, however, I would be worried about stating that you only had to submit discount data. I probably would also mention coverage and territory just to be safe. It's sometimes hard to predict what the examiner's will accept and what they won't accept as a valid answer, and I don't think they would deduct points for also stating coverage & territory as long as you emphasized the discount data.
Note that the actual candidate answer was much shorter and basically just said to submit exposures and written premiums for groups receiving the discount and for groups not receiving the discount.