Assignment_2_document

# Assignment_2_document - Actuarial Science 363 DE...

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Actuarial Science 363 DE Assignment #2 SPRING 2009 Name: Yinghui Pei ID: 20192186 9) 1. Given the following data, calculate the indicated rate level change: Acc. Incurred Development Written Earned Weight Year Losses Factor to Ultimate Premium Premium Applied 2007 635,000 1.10 1,000,000 975,000 30% 2008 595,000 1.15 1,050,000 1,000,000 70% Permissible Loss Ratio: 0.670 Proposed Effective Date: June 1, 2009 Effective Period for Rates: One Year Policy Period: 12 months P Trend factor: 4% per annum effective Apply the Loss Ratio Method here; note that the average accident dates of the accident year and of policy year are July 1 and June 1, respectively. For Year 2007 There are 35 months between July 1, 2007 and June 1, 2010 Expected Dollar Losses (Trended and Developed) = 635,000*1.1*1.04 35/12 = 783,153.66 Assume the loss ratio based on the given earned premium is equal to the loss ratio based on current premium. Expected Effective Loss Ratio = 783,153.66 / 975,000 = 0.8032

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Assignment_2_document - Actuarial Science 363 DE...

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