CAS Exam 8 Fall 2012, Question 14
Study guide: Exam 8
The following information applies for a commercial general liability insured:
- All historical policies were effective January 1 to December 31.
- All historical policies were written on an occurrence basis.
- The policy effective January 1, 2013 will be on a claims made basis.
- The risk is products/completed operations only.
- The annual basic limit premium is $100,000.
- The expected loss ratio is 70%.
- Experience is being evaluated as of June 30, 2012.
- A large loss is defined as $250,000 or more in combined basic limit indemnity and ALAE.
Assuming all losses that occurred in the experience period meet the requirements to be defined as large losses, calculate the minimum number of large losses that must have occurred to trigger a debit modification for policy year 2013.
Part a (4 points)
Answer this question and see the worked solution