CAS Exam 8 Fall 2016, Question 14
Study guide: Exam 8
A retrospective rated policy has both a loss limitation and a maximum premium.
Part a (0.5 points)
Demonstrate how the charges for the loss limitation and the maximum premium overlap.
Part b (0.5 points)
Explain how the overlap is handled differently when using Table M versus Table L.
Part c (0.75 points)
An actuary is pricing a large worker's compensation policy with a fixed loss limit of $100,000. Recommend a table of insurance charges, Table M or Table L, that the actuary should use and provide two reasons supporting the recommendation.
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