CAS Sample Question Q24 - a
Hello,
What makes up hybrid contracts in P&C insurance? I tried looking online and all I could find was it basically explaining something with an investment component that isn't usually what P&C is about...
I guess by question is, their answer key gives 2 acceptable answers, one being A/B/CDE and another AB/CDE.
For the first - would it be based on LOB for A & B and hybrid for CDE?
The second would be only grouped A&B together if a majority is in property LOB?
When I see this question initially, I want to keep CDE separate, but are we grouping it because they're all liability contracts?
Thanks!
Comments
I think hybrid here just means multiline
Option 2 groups based on predominant exposure imo (Property and liability). The liability portion of A is likely low as a % of the total exposure which is why they can be grouped together
Option 1 is tricky - I think A is split out because it is an Aggregate Stop Loss, while B is very different to C,D and E.
C,D, E go together naturally because they are both liability and very long tailed.
As the question mentions, any reasonable justification will be accepted but imo I can't see not grouping C,D and E together as being acceptable