Exam 8 Practice Question 9
Study guide: Exam 8
A one-year workers compensation policy is written on an incurred loss retrospective rating plan:
- Basic premium: $40,000
- Loss conversion factor: 1.10
- Tax multiplier: 1.05
- Minimum retrospective premium: $120,000
- Maximum retrospective premium: $300,000
- Deposit premium paid at inception: $200,000
Ratable losses are $60,000 at the first adjustment, six months after the policy expires, and $150,000 at the second adjustment, one year later.
Calculate the additional premium the insured pays at the second adjustment.
- A) Less than 70,000
- B) At least 70,000, but less than 82,000
- C) At least 82,000, but less than 90,000
- D) At least 90,000, but less than 100,000
- E) At least 100,000
Answer this question and see the worked solution