CAS Exam 8 Fall 2014, Question 8
Study guide: Exam 8
An actuary is pricing a one-year commercial general liability occurrence policy. The following information is available:
- Renewal effective date is January 1, 2014
- Losses are evaluated as of September 1, 2013
| Effective Date of Policy | Company Subject Loss Costs |
|---|---|
| January 1, 2013 | $35,700 |
| January 1, 2012 | 50,300 |
| January 1, 2011 | 40,300 |
| January 1, 2010 | 32,600 |
| January 1, 2009 | 22,500 |
| Date of Loss | Paid & Outstanding Loss Amounts | ALAE |
|---|---|---|
| July 21, 2013 | $2,000 | $0 |
| September 7, 2012 | 10,000 | 0 |
| April 1, 2011 | 100,000 | 20,000 |
| November 13, 2010 | 40,000 | 0 |
| February 14, 2010 | 70,000 | 0 |
| May 5, 2009 | 12,000 | 0 |
Given that the experience modification is equal to 0.443, calculate the adjustment to reflect the ultimate level of loss.
Part a (2.5 points)
Answer this question and see the worked solution