Test a pricing situation against the four principles in the CAS Statement of Principles Regarding Property and Casualty Insurance Ratemaking.
Free CAS Exam 5 (Basic Ratemaking and Reserving) lesson in Ratemaking. 19 min read, ~2,793 words.
Principle 1: a rate estimates the expected value of FUTURE costs, so raw historical losses must be developed and trended forward. Principle 2: a rate provides for ALL costs of risk transfer; SOP Section I enumerates nine cost categories (incurred losses, ALAE, ULAE, commission/brokerage, other acquisition, taxes/licenses/fees, policyholder dividends, general...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- A16
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