CAS Exam 5 Fall 2016, Question 2
Study guide: Exam 5
Given the following:
| Effective Date | Rate Change |
|---|---|
| September 1, 2012 | -10% |
| September 1, 2013 | -5% |
| September 1, 2014 | -3% |
- A law change mandated a rate decrease of 15% effective February 1, 2015 applicable to all in-force policies.
- All policies are annual.
Part a (1 point)
Calculate the on-level factor to current rate level for calendar year 2014 earned premium.
Part b (0.5 points)
Identify a weakness with the parallelogram method and briefly describe a solution.
Answer this question and see the worked solution