Term Test 1_solutions

75 seelecture1slide14orlecture4slide45 actsc862only 37

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Unformatted text preview: 3) (4) Ground‐Up Losses Excess Excess of Losses $500,000 $1,400,000 $400,000 $0 $0 $1,850,000 $350,000 $3,250,000 $750,000 $2,100,000 $600,000 $8,600,000 $2,100,000 (5) (6) Non‐Excess Losses $7,850,000 $6,750,000 $8,450,000 $8,450,000 $7,550,000 $39,050,000 Excess Ratio 5.1% 0.0% 4.1% 8.9% 7.9% 5.4% (4) = (3) ‐ [(2) x $500,000] (5) = (1) ‐ (4) (6) = (4) / (5) {See lecture #3, slide 12 – we walked through this in class. See also page 97 of the text.} (2) 6. You are given the following information: • Current base rate is $800 per exposure • Profit and contingencies provision is 5% • Other variable expenses represent 21% of premium • Fixed expenses are $50 per exposure It has come to your attention that the fixed expenses were actually $60 per exposure for the previous rating period. What was the actual profit and contingencies provision that was in your rates...
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This note was uploaded on 04/14/2012 for the course ACTSC 462 taught by Professor Wslennox during the Spring '11 term at Waterloo.

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