CAS Exam 8 Fall 2015, Question 7

Study guide: Exam 8

The following Lee diagram applies to a cumulative size of loss distribution F(x), where letters A through L represent the areas of the enclosed regions.

Part a (0.25 points)

Express the area G + H in integral form, using the layer method.

Part b (0.25 points)

Express the area B + C + D in integral form, using the size method.

Part c (0.25 points)

Assume R is the basic limit. Express the increased limits factor for limit S algebraically using the area labels provided in the graph.

Part d (1.25 points)

Describe the consistency test for increased limit factors. Use a graph to explain what the consistency test is evaluating. Label all relevant features of the graph.

Answer this question and see the worked solution

Concepts tested

• Increased Limits
• Limited Expected Value
• Layer of Insurance

More questions from this set

• CAS Exam 8 Fall 2015, Question 6
• CAS Exam 8 Fall 2015, Question 8