CAS Exam 5 Fall 2016, Question 11
Study guide: Exam 5
Given the following ground-up uncapped loss profile for a book of business:
| Claim Type | Number of Claims | Loss Amount of each Claim |
|---|---|---|
| A | 200 | $5,000 |
| B | 100 | $20,000 |
| C | 10 | $100,000 |
| D | 10 | $400,000 |
Part a (1.25 points)
Calculate the increased limits factor for an increased limit of 25,000 and a basic limit of 10,000.
Part b (1.5 points)
Calculate the severity trend for the layer excess of $50,000 assuming a ground-up severity trend of 10% over the next year.
Part c (0.5 points)
Provide one reason why the data above would not be appropriate to determine an increased limits factor for $100,000 and suggest an alternative source that could be used.
Answer this question and see the worked solution