CAS Exam 5 Fall 2019, Question 2
Study guide: Exam 5
Given the following policies for an insurance company:
| Policy | Effective Date | Expiration Date | Written Premium |
|---|---|---|---|
| A | March 1, 2017 | February 28, 2018 | 1,200 |
| B | June 1, 2017 | November 30, 2017 | 1,500 |
| C | July 1, 2017 | June 30, 2018 | 2,000 |
| D | October 1, 2017 | September 30, 2018 | 750 |
| E | January 1, 2018 | December 31, 2018 | 900 |
| F | April 1, 2018 | September 30, 2018 | 1,650 |
| G | August 1, 2018 | July 31, 2019 | 1,350 |
Part a (0.25 points)
Calculate the written premium for the fiscal year ending July 31, 2018.
Part b (0.25 points)
Calculate the in-force premium as of December 15, 2018.
Part c (0.5 points)
Calculate the 2018 calendar year written premium if Policy C is cancelled on March 31, 2018.
Part d (0.5 points)
Discuss if it is appropriate for this insurer to estimate earned premium for the current year by averaging the in-force premium at the end of the current year and prior year.
Part e (0.25 points)
Identify one potential use of in-force premium other than estimating earned premium.
Answer this question and see the worked solution