CAS Exam 8 Fall 2018, Question 8
Study guide: Exam 8
An actuary has been using risk-adjusted increased limit factors to account for riskiness in pricing. The actuary's coworker has suggested an alternate approach of using non-risk-adjusted increased limit factors and, instead, varying the profit and contingency load with the policy limit.
Compare and contrast the two methods with respect to each of the following:
- Accuracy
- Ease of calculation
- Clarity
Part a (1.5 points)
Answer this question and see the worked solution