CAS Exam 5 Fall 2017, Question 13
Study guide: Exam 5
Given the following information:
| Territory | Current Premium ($000) | Current Territory Factor | Indicated Territory Factor |
|---|---|---|---|
| 1 | 90 | 0.80 | 0.70 |
| 2 | 300 | 1.00 | 1.00 |
| 3 | 260 | 1.15 | 1.10 |
| Total | 650 |
Management requires achieving the following objectives with the upcoming rate change:
- Target an overall rate level increase of 10%.
- Revise territorial relativities to the indicated relativity, while capping the overall rate impact to any territory at 13%.
- Territory 2 remains the base territory.
Calculate the territorial relativities that will be implemented with the rate change.
Part a (2.25 points)
Answer this question and see the worked solution
Concepts tested
- Considerations for Implementing Rates
- Territory Ratemaking
- Classification Ratemaking
- Overall Rate Level Indication
- Ratemaking Constraints