CAS Exam 5 Spring 2019, Question 4
Study guide: Exam 5
Given the following information:
| Claim Number | Total Limits Loss ($000s) |
|---|---|
| 1 | 15 |
| 2 | 21 |
| 3 | 24 |
| 4 | 55 |
- Each total limits loss is subject to an 8% annual severity trend.
- Basic limit = $25,000.
Part a (1 point)
Calculate the basic limits loss trend over a one-year timeframe.
Part b (0.75 points)
Calculate the excess loss trend over a one-year timeframe.
Part c (0.5 points)
Discuss the appropriateness of applying total limits trend to losses at basic limits for purposes of ratemaking.
Answer this question and see the worked solution