Actuarial Notes

CAS Exam 5 Fall 2019, Question 15

Study guide: Exam 5

A workers compensation annual policy for a large insured is expiring on January 1, 2020. The following changes have taken place at the insured since the policy was last issued on January 1, 2019:

  • The insured has implemented a new job-specific training program to reduce the expected number of claims.
  • The insured has doubled the number of their employees.

Part a (0.5 points)

Briefly describe how each of these changes could be accounted for in the final premium for the January 1, 2020 renewal policy.

Part b (1 point)

Describe how each of these changes are accounted for in the final premium on January 1, 2024 if the insured has no additional changes over the next four years.

Part c (0.5 points)

Describe one additional rating mechanism that would benefit the company if the insured has grown substantially larger and more operationally complex between January 1, 2020 and January 1, 2024.

Answer this question and see the worked solution

Concepts tested

More questions from this set