CAS Exam 8 Fall 2015, Question 9
Study guide: Exam 8
Given the following Premises/Operations General Liability loss experience evaluated as of September 1, 2013:
| Policy Effective Date | Policy Type | Total Ground-Up Incurred Loss | Total Ground-Up Incurred ALAE |
|---|---|---|---|
| March 1, 2010 to February 28, 2011 | Occurrence | 1,500,000 | 600,000 |
| March 1, 2011 to February 29, 2012 | Occurrence | 400,000 | 400,000 |
| March 1, 2012 to February 28, 2013 | Occurrence | 350,000 | 2,000,000 |
| March 1, 2013 to February 28, 2014 | Occurrence | 150,000 | 20,000 |
- The insured has experienced the following ground-up large losses:
| Accident Date | Incurred Loss | Incurred ALAE |
|---|---|---|
| June 30, 2010 | 700,000 | 500,000 |
| December 31, 2011 | 150,000 | 200,000 |
| April 5, 2012 | 55,000 | 60,000 |
- Annual Basic Limits Premium = $800,000.
- Expected Loss and ALAE Ratio = 80%.
A new policy will become effective March 1, 2014 to February 28, 2015 and will be written on an occurrence basis.
Using the ISO Commercial General Liability Experience and Schedule Rating Plan, calculate the experience modification factor used to price this policy.
Part a (3.25 points)
Answer this question and see the worked solution