Schedule F, Sample Q8
This is another one that seems to be raising a lot of questions….
In particular, people are wondering why the 45K claim (8/19) and the 16.4K claim (10/25) are not recorded as “current” since they are under 50K (the paper mentions that the insurer does not report the claims until the totals exceed 50K).
However, we need to focus on the total claims, as opposed to individual claims. So, while it is true that the 45K claim will not be reported to the reinsurer because it is under 50K; when the following claim (136.4K) occurs, the cumulative total (45 + 136.4) has NOW exceeded 50K, so the insurer can report them together. Therefore the due date of the 45K claim will be set equal to the due date of the 136.4K claim (since they are reported on the same date).
Note that when answering this question in the exam, I strongly recommend stating your asssumptions (ie “45K claim is not reported as it is under 50K” AND “45K claim will be reported with the 136.4K claim since the total now exceeds 50K”); since the question writer/ grader may have unintentionally included a claim under 50K without considering this rule. This MAY be unnecessary (if it was indeed intentional), but better be safe in advance, rather than having to go through the appeal process.