CAS Exam 5 Spring 2017, Question 7
Study guide: Exam 5
Given the following:
| Class | Earned Exposures | Reported Loss and ALAE | Current Relativity |
|---|---|---|---|
| A | 10,500 | $512,000 | 1.00 |
| B | 5,200 | $740,000 | 1.50 |
| C | 13,100 | $632,000 | 1.30 |
- Full credibility standard is 13,260 exposures.
- Partial credibility is determined based on the square root rule.
- The complement of credibility is no change.
Calculate the indicated rate change for each class that results in a revenue-neutral overall change.
Part a (2 points)
Answer this question and see the worked solution
Concepts tested
- Classification Ratemaking
- Pure Premium
- Partial Credibility
- Complement of Credibility
- Pure Premium Analysis