SOA Exam FAM Sample Question 75
Study guide: Exam FAM
A primary liability insurer has a book of business with the following characteristics:
- All policies have a policy limit of 500,000
- The expected loss ratio is 60% on premiums of 4,000,000
A reinsurer provides an excess of loss treaty for the layer 300,000 in excess of 100,000.
The following table of increased limits factors is available:
| Limit | ILF |
|---|---|
| 100,000 | 1.00 |
| 200,000 | 1.25 |
| 300,000 | 1.45 |
| 400,000 | 1.60 |
| 500,000 | 1.70 |
Calculate the reinsurer's expected losses for this coverage (answer to the nearest 000s).
- A) 840,000
- B) 847,000
- C) 850,000
- D) 862,000
- E) 871,000
Answer this question and see the worked solution