Finger question : 1997 , Q43

Andrew Chu ( (no email) )
Thu, 30 Apr 1998 14:47:56 PDT

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Hi everyone,
I had a quick question on this loss ratio relativity problem. In
Finger's text, when doing the Balanced adjustment, he uses "Current
Business Premium" to extend the credible adjustment. This obtains the
off balance factor that is incorporated into the balanced adjustment.

Here's my question: In the 1997 cas answer key, it looks like they used
Combined EP to extend the credible adjustment. In the CSM manual,
Murdza uses current year earned premium. Now, neither one exactly
matches the Finger exhibit- I would have thought that using Current
Premium as a proxy would be sensible. Right now, however, I'm more
interested (for may 8th) in doing things the way the CAS exam commmittee
thinks they should be done. Does anyone have any suggestions or
conclusions? (the cas answer key's balanced adjustment also seems
odd...)

Thanks.
A.C.

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