CAS Exam 5 Spring 2015, Question 2
Study guide: Exam 5
An insurer is considering changing the exposure base for a commercial auto line of business to one of the following:
i. Annual fuel expense ii. Number of miles driven
Using three relevant actuarial criteria, evaluate the effectiveness of each of these potential exposure bases and provide a recommendation for the preferred exposure base.
Part a (2 points)
Answer this question and see the worked solution