CAS Exam 5 Fall 2019, Question 9

Study guide: Exam 5

Part a (0.5 points)

Briefly describe one similarity and one difference between the purposes of risk classification and individual risk rating.

Part b (0.5 points)

Briefly describe a situation for each of the following:

i. A classification rating plan is more appropriate than individual risk rating

ii. Neither a classification rating plan nor individual risk rating is necessary

Part c (0.75 points)

Briefly describe three reasons a rating characteristic might not be included in a classification rating plan.

Answer this question and see the worked solution

Concepts tested

• Classification Ratemaking
• Risk Classification Restrictions
• Adverse Selection
• Commercial Lines Rating

More questions from this set

• CAS Exam 5 Fall 2019, Question 8
• CAS Exam 5 Fall 2019, Question 10