RE: Boor: Trended Permissible

Gardner, Brad ( (no email) )
Mon, 23 Mar 1998 08:23:42 -0700

I agree...the assumed effective date is 1/1/96. Boor trends the present
pure premium rate from the original target effective date of the current
rates (1/1/94) to the assumed effective date of 1/1/96 (i.e., two
years). This is the same method Graves & Castillo use to calculate "C"
but they use ELR and not the present pure premium rate(page 671). Graves
& Castillo trend the ELR from one year beyond the last rate review to
one year beyond the assumed effective date. Total trend period could be
the same for the two papers but "from" and "to" dates are different????
Any comments.

Also, on page 329 of the Boor paper, Boor defines Lc "as the historical
loss costs for the subject class c." To me loss costs are synonymous
with pure premium (PP). So, is the term Lc/Ec the average PP per
exposure (PP/exposure) or the PP (losses/exposure)? Thanks.

-----Original Message-----
From: Richard Sieger [mailto:110320.3071@compuserve.com]
Sent: Tuesday, March 17, 1998 5:49 PM
To: Part 6 Study Group
Subject: Boor: Trended Permissible

On Page 337, Joe Boor's calculation of the trended permissible trends
the
present pure premium 2 years (1.1 is carried to the second power). He
doesn't specify the assumed effective date for the proposed rate, so the
trending period does not seem obvious . I assume because he says "...the
following data for 1996 policy rates" that the assumed effective date
for
the proposed rates is 1/1/1996, two years after the effective date
requested for last change (1/1/1994). Thus two years of trend.

Anyone disagree?

Rich Sieger