According to the method used in Feldblum's study note, and given the data
below, which of the following is the correct workers compensation premium on-
level factor for calendar year 1983.
Date Effect
Rate level lchange 1/1/83 20.0%
Benefit level change 7/1/83 10.0%
Answer: There are (12)(12)= 144 units involved. 44/144 are at 1.0, 18/44 at
1.20,
18/44 at 1.1, and 54/144 at 1.32. The average rate level is 1.158 and the on-
level factor equals 1.3201/1.158=1.140.
And this one from the 1981 part 6 exam:
What is the current on-level factor for the policy year 1979 earned premium
for workers compensation in State X, assuming annual policies, uniform
distribution of effective dates, and the following changes: (The benefit level
change applies to all outstanding policies.)
Date Effect
Rate level change 7/1/79 10.0%
Benefit level change 1/1/80 20.0%
Rate level change 7/1/80 20.0%
Answer: There are (12)(12) exposure units involved. 54/144 are at 1.0,
18/144 are
at 1.10, 18/144 are at 1.20 and 54/144 are at 1.21. The average rate level is
1.158 and the on-level factor equals 1.584/1.158=1.368.
My question: Why are these premiums brought to current rate level, but not in
the question I previously posted?
Densely yours,
Faith