CAS Exam 5 Fall 2013, Question 8
Study guide: Exam 5
Given the following information:
| Calendar/Accident Year | Earned Exposures | Non-Catastrophe Number of Claims | Non-Catastrophe Reported Losses and ALAE ($000s) | Reported Loss and ALAE Development Factor | Loss Trend Factor |
|---|---|---|---|---|---|
| 2010 | 20,725 | 350 | $11,446 | 1.000 | 1.145 |
| 2011 | 21,220 | 310 | $12,757 | 1.006 | 1.121 |
| 2012 | 23,015 | 320 | $11,295 | 1.068 | 1.080 |
- ULAE = 2% of loss and ALAE.
- Regional non-catastrophe pure premium (including LAE) = $602.
- Non-modeled catastrophe pure premium (including LAE) = $30.
- Modeled catastrophe pure premium (including LAE) = $75.
- Projected net reinsurance cost per exposure = $22.
- Projected fixed expense per exposure = $35.
- Profit and contingency provision = 5.0%.
- Variable expense provision = 16.0%.
- Projected on-level average premium = $945.
- Claims required for full credibility for all three years combined = 1,082.
- The insurer uses the square root rule to determine partial credibility.
Calculate the credibility-weighted indicated rate change.
Part a (2 points)
Answer this question and see the worked solution