CAS Exam 5 Fall 2016, Question 9
Study guide: Exam 5
(1 point)
Given the following:
| General Expenses | $225,000 |
| Written Premium | $3,750,000 |
| Earned Premium | $3,000,000 |
| Other Acquisition Expense | 8.0% |
| Commission | 12.0% |
| Taxes, Licenses & Fees | 3.0% |
| Projected Ultimate Loss and LAE Ratio | 62.0% |
| Target Underwriting Profit Ratio | 5.0% |
- All expenses are paid at policy inception.
- Commission and Taxes, Licenses & Fees are 100% variable.
- All other expense categories are 50% variable.
Calculate the indicated rate change assuming the data is fully credible.
Part a (1 point)
Answer this question and see the worked solution
Concepts tested
- Overall Rate Level Indication
- Underwriting Profit
- Variable Expenses
- Fixed Expenses
- Loss Ratio Method