CAS Exam 6C Spring 2018, Question 2
Study guide: Exam 6C
A Fellow of the Canadian Institute of Actuaries (FCIA), working for a property and casualty insurance company, has prepared a rate filing for Ontario private passenger automobile.
The company recently started writing Ontario private passenger automobile insurance and has fifty in-force vehicles with total annual premium of $100,000.
Below are the territorial differential changes proposed in the rate filing. Assume no changes are proposed for all other territories.
| Territory | Territorial Differential Change Before Rebasing the Average Proposed Differential | Territorial Differential Change After Rebasing the Average Proposed Differential |
|---|---|---|
| 1 | 9% | 12% |
| 2 | -5% | -4% |
| 3 | 2% | 4% |
The final rate change proposed in the rate filing is an overall rate increase of 1.0%.
Part a (0.75 points)
Identify three factors which impact the length of the loss trend period.
Part b (0.75 points)
The actuary relied entirely on the internal experience of the insurance company for the rate filing. Evaluate this approach and propose an alternative approach, if necessary.
Part c (0.5 points)
Given the above territorial differential change analysis, evaluate and justify whether the proposal satisfies the Financial Services Commission of Ontario (FSCO) guideline.
Part d (0.5 points)
State whether a certificate of the actuary is required in the filing and briefly discuss whether the actuary is qualified to sign the certificate.
Answer this question and see the worked solution