640 Class 9 Auto Pricing Example_Bryan

640 Class 9 Auto Pricing Example_Bryan - 8. Months for los...

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Auto Insurance Ratemaking 05/07/20 9 as of 06:38:45 CAB CONSULTING, L L Page 1 718baef6f3e7a69e594e89516e614 0a924283ac.xls EXAMPLE OF AUTO INSURANCE RATEMAKING You are creating a new auto insurer in Louisiana. You have be n given the fol owing los experience. You have also be n given some other information. 1. Experience available Pure Average Clas Car Years Los es Premium Premium Young drivers 50 30 0 0 60 80 Adult Drivers 250 1250 0 50 70 Total 30 0 15 0 0 516 716.67 Detailed stats Direct Ind Agency 2. General Expense Ratio 0.1 0.15 Note: You can only achieve the .10 expense ratio if you have at least $10M in premium volume. Otherwise, the expense ratio is .25. Direct Ind Agent 3. Commis ion 0.0 0.10 4. An ual Inflation Trend For Los es 0.05 Actuary/Judgment 5. Average date of experience 7/1/20 6 Statistical/actuary 6. Ef ective date of rates 1/1/20 8 State filings/regulatory Note: Rates wil be in ef ect for one year. 7. Average date of los for 1 yr policy 1/1/20 9 One year later
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Unformatted text preview: 8. Months for los trend 30 monthsFrom 7/1/20 6 to 1/1/20 9 Note: The average date that los es are paid is 12 months after the date of ac ident. 9. Los trend factor Raise 1.05 to 30/12 power 10. Inadequacy in los es 1.05 Actuary Auto Insurance Ratemaking 05/07/20 9 as of 06:38:46 CAB CONSULTING, L L Page 2 718baef6f3e7a69e594e89516e614 0a924283ac.xls 1 . Los es adjusted for trend and development(inadequacy) Pure Clas Car Years Adjusted Los es Premium Young drivers Adult Drivers Total 12. Profit and Contingency Factor 0.1 CEO/CFO/Actuary 13. Required Expense Loading 14. Indicated rates Clas Young drivers Adult drivers Total Question: What distribution system wil you use? Question: What wil be your initial rates? Ad ed fact: If a risk is rated with go d credit, then the los es it generates wil be 10% les than average. How does this change your answer?...
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640 Class 9 Auto Pricing Example_Bryan - 8. Months for los...

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