CAS Exam 8 Fall 2017, Question 8
Study guide: Exam 8
An insurer sells coverage with an attachment point of 5,000 and a layer limit of 5,000. The following table represents the expected cumulative severity distribution and limited expected severity for the current year at various limits:
l |
F(l) |
E[X;l] |
|---|---|---|
| 4,545 | 0.842 | 1,807 |
| 5,000 | 0.859 | 1,875 |
| 5,500 | 0.875 | 1,941 |
| 9,091 | 0.938 | 2,256 |
| 10,000 | 0.947 | 2,308 |
| 11,000 | 0.954 | 2,357 |
The actuary expects a 10% severity increase for all claim sizes next year.
Part a (0.75 points)
Calculate the percent change in frequency of claims in the layer.
Part b (1 point)
Calculate the percent change in pure premiums in the layer.
Answer this question and see the worked solution