CAS Exam 5 Fall 2017, Question 10
Study guide: Exam 5
Given the following:
| Territory | True Relativity | Univariate Indicated Relativity | Loss & ALAE ($000) |
|---|---|---|---|
| 1 | 0.50 | 0.46 | 3,680 |
| 2 | 1.00 | 1.00 | 8,000 |
| 3 | 1.20 | 1.28 | 11,636 |
| Earned Exposures (000) — Territory | Class A | Class B | Class C |
|---|---|---|---|
| 1 | 150 | 70 | 110 |
| 2 | 105 | 115 | 110 |
| 3 | 70 | 180 | 125 |
| Class | A | B | C |
|---|---|---|---|
| Charged Factor | 0.85 | 1.15 | 1.00 |
Part a (0.5 points)
Explain why the univariate indicated relativities are different from the true relativities.
Part b (1.25 points)
Calculate territory relativities using the adjusted pure premium method, keeping territory 2 as the base level.
Answer this question and see the worked solution