SOA Exam FAM Sample Question 95
Study guide: Exam FAM
You use the following information to calculate projected loss costs:
(i) Based on historical experience, the slope of the straight line fitted to the natural log of the loss cost is 0.182.
(ii) The loss cost per unit exposure for the two most recent experience periods is:
| Accident Year | Loss Cost per Unit Exposure |
|---|---|
| AY3 | 400 |
| AY4 | 450 |
(iii) The current experience period is weighted 90% and the prior experience period is weighted 10%.
New rates for one-year policies take effect May 1, CY5 and are in effect for one year.
Calculate the projected loss cost for these new rates.
- A) 527
- B) 577
- C) 615
- D) 632
- E) 666
Answer this question and see the worked solution