Two online papers in the same session: a theory paper in Word and a paper answered in R, combined 70:30.
Paper A
3 hours 20 minutes, a theory paper answered in Word
Paper B
1 hour 50 minutes, questions answered in R, results presented in Word
Final mark
70% Paper A and 30% Paper B, both sat in the same session, with one pass mark
What each paper asks
Paper A: questions of varying marks with full working, including short explanations and comments.
Paper B: questions of varying marks answered with R on data sets given with the paper, with the results and comments presented in Word.
About 5% of marks test knowledge, 75% application and 20% higher-order skills.
R for Paper B
You need R and RStudio installed and working before the exam. Every Paper B question in this course comes with its own data set to download and the R code and output for its solution.
Try a question
Pareto claims under excess of loss
Paper A style · Losses and reinsurance · Straightforward · 8 marks
Individual claim amounts on a household contents portfolio follow a Pareto distribution with parameters α=4 and λ=2,400, so that F(x)=1−(2400+x2400)4 for x>0. The insurer has an individual excess of loss reinsurance treaty with retention £2,000.
(i)
Calculate the probability that a claim involves the reinsurer, to 4 significant figures.
1 mark
(ii)
Calculate the insurer's expected payment per claim, to the nearest penny.
3 marks
(iii)
Calculate the reinsurer's expected payment on a claim that involves the reinsurer, to the nearest penny.
2 marks
(iv)
Hence calculate the reinsurer's expected payment per claim (including claims that do not involve it), to the nearest penny, and check your answers against the mean claim amount.