Term Test 1_solutions

Seepage115and116ofthetext 24

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Unformatted text preview: nd was determined to be 4.0% • Past trend was determined using historical loss data up to and including accident year 2011 • Future trend is selected to be 3.0% Solution: • Current (past) trend period: average accident date in 2009 to average accident date in current accident year 2011 = July 1, 2009 to July 1, 2011 = 2 years • Future trend period: o average accident date in current accident year 2011 = July 1, 2011 o average accident date in future rating period: policies written between Jan 1, 2013 to Dec 31, 2013, 6 month policies, therefore accidents can occur on policies in force between Jan 1, 2013 and June 30, 2014 average accident date = Oct 1, 2013 o theref...
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