Overall Average Rates and Rate Changes

Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Pricing and Reserving for Short-Term Insurance Coverages. 13 min read, ~1,897 words.

Loss cost method: Indicated Rate = Indicated PP / PLR. Rate Change = Indicated Rate / Current Rate - 1. Loss ratio method: Rate Change = Adjusted LR / Target LR - 1. Both methods are algebraically equivalent from the same adjusted data, differing only in framing. LCM (Loss Cost...