CAS Exam 8 Fall 2015, Question 16
Study guide: Exam 8
An actuary prices a retrospectively rated policy with effective date January 1, 2015 using the NCCI Retrospective Rating Plan Manual. The following information applies:
| Item | Value |
|---|---|
| Maximum premium | $12,300,000 |
| Expected loss | $4,000,000 |
| Expense provision (excluding taxes) | $1,629,440 |
| Loss conversion factor | 1.2 |
| Tax Multiplier | 1.025 |
| State Hazard Group Differential | 0.98 |
The plan has no specified minimum premium and no per occurrence limit.
Part a (2 points)
Calculate the loss at maximum premium that balances the plan.
Part b (0.5 points)
Calculate the basic premium.
Answer this question and see the worked solution