CAS Exam 7 Spring 2013, Question 18
Study guide: Exam 9
A reinsurance company is pricing a casualty excess-of-loss reinsurance treaty that covers loss and allocated loss adjustment expense (ALAE).
Part a (0.75 points)
Discuss the relationship between loss and ALAE amounts for a casualty line of business, specifically, how the relationship typically differs between large and small claims.
Part b (0.5 points)
Describe how the relationship between loss and ALAE can be modeled in the pricing of a casualty excess-of-loss reinsurance treaty.
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