Calculate overall average rates and rate changes using the loss cost and loss ratio methods.
Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Reserving and Pricing for Short-Term Insurance Coverages. 34 min read, ~5,048 words.
Loss cost method: indicated rate, where is pure premium, is fixed expense per exposure, is variable expense ratio, is target profit. Loss ratio method: indicated change factor, using on-level premium in the loss ratio. Permissible loss ratio, the denominator in both formulas. Fixed expense sits in the numerator; variable expense...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 6d
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