CAS Exam 5 Fall 2015, Question 1
Study guide: Exam 5
Given the following information:
| Effective Date | Number of Autos Written on Effective Date |
|---|---|
| February 1, 2013 | 1,100 |
| August 1, 2013 | 800 |
| February 1, 2014 | 600 |
| August 1, 2014 | 300 |
- All policies have six-month terms.
- The exposure base is earned car years.
- The premium per auto is $500 per six-month term for policies effective through August 31, 2014.
- A uniform rate change of -18% became effective September 1, 2014.
Part a (0.75 points)
Calculate the written and earned exposures for calendar year 2014.
Part b (2 points)
Calculate the earned premium at current rate level for calendar year 2014 using both the parallelogram method and extension of exposures method, and discuss which method is more appropriate for this situation.
Answer this question and see the worked solution
Concepts tested
- On Level Premium
- Earned Exposure
- Calendar Year
- Earned Premium
- Exposure Base
- Parallelogram Method
- Extension of Exposures