Produce an indicated overall rate change two ways, once with the pure premium approach and once with the loss ratio approach.
Free CAS Exam 5 (Basic Ratemaking and Reserving) lesson in Ratemaking. 12 min read, ~1,812 words.
The pure premium method produces an indicated rate in dollars per exposure; the loss ratio method produces an indicated rate change as a percentage of current rates. Pure premium rate equals (pure premium + fixed expense per exposure) divided by (1 − variable expense % − profit %). Loss ratio...
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- Example 1
- Example 2
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- Exam Shortcuts
Learning objectives
- A11
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