Evaluate and interpret the effects of inflation on losses.
Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Coverage Modifications. 11 min read, ~1,624 words.
Uniform inflation of rate sends. Scale parameter becomes; shape parameters do not move. With a fixed deductible and policy limit, the post-inflation expected payment per loss equals where,. Leveraging effect: the percentage rise in insurer payments exceeds whenever a fixed deductible is present, and is amplified for excess layers. Fixed-dollar...
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- Example 1
- Example 2
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Learning objectives
- 3c
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