Re: practice exam q48 part b

bill g ( billg5@yahoo.com )
Wed, 28 Apr 1999 13:07:49 -0700 (PDT)



I agree with the solution for q48 part a; but the
problem does say that the 5% rate change is
effective on AUGUST 1 ,1997 which leads to a
slightly different on level premium factor fo 1997
of 1.050493 instead of
1.0538 --- anyway assuming 49.2% is the overall
change

Part b q48 allocation of increase to
territories?????

did anyone try to distribute this increase to the
territories.?????????

It seems we lack the detailed exposure information
to use the exhibits in Mcleanahans appendix, and we
also lack the relativities of the territories for
both the 1996 and 1997 year to do the calculation
on
page 268 foundations for finger when the premium in
years 1 and 2 is brought up to a current rate.

How about this idea? I will say that the on level
earned premium for 1996 territories is the onlevel
factor 1.0866 times the earned premiums of
125000;250000;300000 to give 135825;271650;325980
for 1996 terr a,b,c.

Then for 1997 the on level premiums for terr a,b,c
are

1.0538*100000=105380; 1.0538*300000=316140; and
1.0538*325000=342485;

then for terr a,b,c total onlevel premium is
135825+105380=241205; for terr b total premium for
the two years is 271650+316140=587790; for terr c
have total premium 325980+342485=668465;

then overall loss ratio is 1452539/1497460= 0.97 as
before; and the loss ratio for terr a is
(100000+125000)/241205=0.933; for terr b is
(300000+400000)/587790=1.19; for terr c the loss ratio is
(200000+225000)/668465=.636.

Then using the formula approach the preliminary adjustments are for
terr a,b,c .933/.97=.962; for terr b have 1.19/.97=1.23 and for terr c
have .636/.97=
..656 .

then finally the increases are the overall increase * preliminary adj

so for terr a have 1.492 * .962 = 1.435 or 43.5%;
for terr b have 1.492 * 1.23 =1.835 or 83.5%;
for terr c have 1.492 * .656 = .979 or -2.12%;

does anyone agree or disagree with my calculations????

thanks for your help

billg

billg5@yahoo.com



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