CIA - Runoff Flashcards

1
Q

Describe the methods to handle the time value of money in claims runoff. (2)

A
  • DISCOUNTING:discount the paid and unpaid amounts at time (t) back to time (t-1)
  • SUBTRACTION: subtract investment income earned during the CY(t) on supporting assets & liabilities.
    Note: that the Subtraction method is easier than the Discounting method.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly