CAS Exam 8 Fall 2013, Question 1
Study guide: Exam 8
A company is considering introducing a risk accumulation surcharge into its homeowners rating plan. The surcharge is a territory factor beyond expected pure premium differences and will be applied to territories where the total number of homeowner's risks in the territory is beyond a selected threshold.
Construct an argument for or against the introduction of the risk accumulation surcharge and whether it accomplishes the three primary purposes of risk classification listed in the American Academy of Actuaries "Risk Classification Statement of Principles."
Part a (2.25 points)
Answer this question and see the worked solution