Evaluate the effects of the following coverage modifications: deductibles, policy limits, maximum covered loss, coinsurance, and stop loss reinsurance.
Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Coverage Modifications. 32 min read, ~4,730 words.
Per-loss with maximum payment; per-payment. Maximum covered loss lives on the loss scale; policy limit lives on the payment scale. Don't conflate. Inflation by: deflate and inside the LEVs and multiply outside by; a fixed makes payment growth strictly exceed loss growth (leveraged inflation). Franchise deductible pays the full once...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Common Mistakes
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- Exam Shortcuts
Learning objectives
- 3a
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