CAS Exam 5 Fall 2014, Question 1
Study guide: Exam 5
In an attempt to improve poor workers compensation underwriting results, an insurance company is considering changing its exposure base from number of employees to number of hours worked.
Part a (0.5 points)
Identify two criteria of a good exposure base.
Part b (0.5 points)
Briefly discuss whether this change in exposure base is appropriate for each of the criteria from part a. above.
Part c (0.25 points)
Briefly describe the impact the exposure base change could have on frequency.
Part d (0.25 points)
Briefly describe the impact the exposure base change could have on severity.
Part e (0.5 points)
Discuss an impact the exposure base change could have on the company's loss ratio.
Answer this question and see the worked solution