CAS Exam 5 Spring 2017, Question 9
Study guide: Exam 5
Given the following information for an insurance company:
| State | Class | Exposures | Losses | Current Pure Premium |
|---|---|---|---|---|
| A | 1 | 200 | $800 | 4.00 |
| A | 2 | 300 | $2,100 | 7.00 |
| A | Subtotal | 500 | $2,900 | 5.80 |
| B | 1 | 300 | $600 | 2.00 |
| B | 2 | 300 | $1,500 | 5.00 |
| B | Subtotal | 600 | $2,100 | 3.50 |
| C | 1 | 500 | $1,500 | 3.00 |
| C | 2 | 750 | $4,500 | 6.00 |
| C | Subtotal | 1,250 | $6,000 | 4.80 |
| All | 1 | 1,000 | $2,900 | 2.90 |
| All | 2 | 1,350 | $8,100 | 6.00 |
| All | Total | 2,350 | $11,000 | 4.68 |
- Full credibility standard is 1,500 exposures.
Part a (1.5 points)
Calculate the credibility-weighted pure premium for class 2, state B using Harwayne's method.
Part b (0.5 points)
Discuss the appropriateness of using Harwayne's method for this company.
Part c (0.75 points)
Evaluate Harwayne's method using three desirable qualities for a complement of credibility.
Answer this question and see the worked solution