CAS Exam 9 Spring 2015, Question 22
Study guide: Exam 9
The chief actuary of a small monoline P&C carrier writing coverage in one state files rates that are 10% higher than they were in the prior year. To support the filing, the chief actuary claims that investors are demanding higher rates of return than what the company has historically achieved. Additionally, the chief actuary notes that competitors have been achieving higher rates of return on equity.
Part a (1 point)
Evaluate whether the chief actuary's justification for the rate increase is reasonable from the regulator's perspective.
Part b (1 point)
Identify and briefly describe two additional items the regulator may wish to consider when evaluating whether the proposed rates of any insurer are acceptable.
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