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Tutorial 6

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23 views

Tutorial 6

Uploaded by

nurul
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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Tutorial 6:

1. The underwriting and claim department has provided you with the following rates:

Earned Exposures Premium Rate Ultimate Losses,


Trended
Territory 1 5000 385.00 1,530,000
Territory 2 4000 492.00 1,375,000
Territory 3 1000 711.00 645,000

The fixed expense ratio is 0.05. The permissible loss ratio is 0.70
You are requested to calculate the indicated overall rate change.

2. You are given the following information about territory differentials and experience:

Territory Differential Experience loss Number of claims


ratio at current
rates
I 1.00 0.70 1000
II 1.25 0.60 628
III 2.50 0.66 209

!
Credibility is assigned based on the formula Z = #"#$% , where n is the number of
claims. Calculate the revised differentials for territories II and III.

3. Rates for insurance differ by territory and class. The base rate for Territory 1A is 500.
Differentials given are 1.2 for Territory 2 and 1.5 for Class B. You are also given the
following exposures and losses, developed and trended:

Exposures
Territory 1 Territory 2
Class A 5000 2000
Class B 1000 1000

Losses
Territory 1 Territory 2
Class A 2,000,000 1,000,000
Class B 500,000 675,000

Calculate the balance-back factor.


4. You are given the following information for losses in three territories:

Differential Earned Trended Exposures


Premium Ultimate Class A Class B
at Current Losses
Rates
Territory 1 1.00 800,00 600,000 4,000 2,000
Territory 2 1.25 750,00 625,000 2,000 2,000
Territory 3 1.50 300,000 200,000 1,000 5000

Calculate the indicated territory differentials using loss cost method.

5. You are given the following data for earned exposures by territory and class and
differentials for classes:

Territory 1 Territory 2 Territory 3 Differential


Class A 6,000 1,250 900 1.00
Class B 2,000 800 700 1.50
Class C 1,000 250 400 2.00

Average premiums are 400 in Territory 1, 440 in Territory 2 and 500 in Territory 3.
Territory 1 is the base territory.

Calculate the differentials for Territories 2 and 3.

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