CAS Exam 5 Fall 2013, Question 9
Study guide: Exam 5
Given the following information:
| Territory | Premium | Current Relativity | Indicated Relativity |
|---|---|---|---|
| 1 | $195,000 | 0.85 | 0.75 |
| 2 | $475,000 | 1.00 | 1.00 |
| 3 | $330,000 | 1.30 | 1.20 |
| Total | $1,000,000 |
Management is requiring that both of the following objectives are achieved with the upcoming rate change:
- Target an overall rate level increase of 20%.
- Revise territorial relativities to the indicated relativity, while capping any territory rate impact at 25% overall.
Calculate the territorial relativities that will be implemented with the rate change.
Part a (2.5 points)
Answer this question and see the worked solution