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I think you're referring to why do we multiply the retrospective development factor by the standard premium instead of the actual loss to date - please let me know if this isn't what you're thinking.
The Fisher text only mentions retrospect…
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In our opinion there isn't really a good answer to your question because the Fisher text currently leaves things too open-ended by saying the basic premium may or may not include the cost of the per-occurrence limit.
If you're asked, as is …
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It all depends on the context. They're the same idea but it depends on what you are trying to price. One person's limit is another person's deductible. For example, in Auto Collision insurance you may have a $1,000 deductible. From the insurer's …
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You're fine. We'll work on clarifying the wiki to make it more clear how to do this type of problem.
We've added a new problem to the GLM PowerPack file which we think is one way the CAS could test this. It's also available here in PDF form…
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Great questions thank you.
1) There is a fair amount of judgment here. What matters most is how you defend your answer. I looked at the absolute value of the difference between the average and actual values for each model (the delta columns…
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Good catch, I accidentally left the solution at $45,000 instead of setting it back to $300,000 after sensitivity testing.
You should have ln(u/(1-u)) = 61.063 which gives the probability of a claim as 100%.
From our answer in part a …
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Yes, for the vertical distance it should be the 10th decile minus the 1st decile. This is because we're ordering the risks from best to worst according to our model. So if the model is performing well, then the largest vertical distance will be b…
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With experience rating we assign each risk a modification which reflects how well we feel the risk fits its manual risk class. When we order the risks by ascending experience modification we should see the manual (actual) loss ratios are increasi…
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This is very nuanced. We cannot readily get the Limited Table M charge and savings from these diagrams. This is because the entry ratios are different.
The Table M and Table L have entry ratios which have the expected unlimited losses in th…
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Great call out thank you. It's an error on our part - we accidentally left the cells locked on the actual column for insurer 1. We've released a new version of the Mahler files which addresses this.
You should be calculating the correlation…
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Yes, this question is definitely testable. While the capital related materials have moved to Exam 9, this question is really testing whether you can work with moments from a lognormal distribution which is covered in the Bahnemann paper.
H…
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You are correct, as the limit increases the insurance charge for decreases and so B decreases, which makes it a smaller percentage of the guaranteed cost premium.
The card was trying to emphasize that B does not vary with the ratable losses…
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Areas A and B both lie below the entry ratio r1. This means they are associated with losses which are smaller than the loss associated with the minimum premium. So the net insurance charge should be reduced to reflect the insured is "paying more"…
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- Yes, you're correct that Table L uses the dashed line and so its savings is A + B.
- Check out the diagram here: in 2013Q15 Comment by admin August 2024
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Frequency and exposure are related. The important piece is accounting for changes in the exposure base. For example, if we double our exposure we would expect our claim count to double so if we look solely at the expected number of claims we woul…
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The graph shows two curves - one for the total loss (solid line) and the other for the limited loss (dashed line). We're told the total loss represents the aggregate losses when there is no per-accident limit.
Table M uses the aggregate los…
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Thanks for pointing this out. You are correct that the savings should be an increasing function of the entry ratio r. In this case we tried to pick nice numbers but failed to ensure we still had a valid Table M. We've updated the Battlecard to fi…
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Thanks, you're correct. We've updated the PDFs and the OneStop files to address this.
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Yes, the above comments from September 2023 apply to the excerpt above.
In general, regardless of your mix of business, it's counterintuitive that you could lower your deductible and be charged a lower premium as well. The insurer is takin…
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H L Mencken said "For every complex problem there is a solution which is clear, simple and wrong."
In this case, I clearly needed more coffee as |b| + 1 is always greater than 0.
The text is right but the language used is tripping us…
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This is a matter of calculus. Let's quickly abstract to make it easier to see.
I'll write b for beta and use a subscript _B to indicate the base level. We'll assume b < 0 and write b = -|b|.
We'll assume the AOI variable is the onl…
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No. Currently, according to the CAS we are not expected to draw any chart/plot in the worksheet during the exam. ht…
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The difference here is how the syllabus readings have changed over time. The Fisher text today says the basic premium may or may not include a charge for losses in excess of the per-occurrence limit. The text used on older exams said the basic pr…
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Rule 5A is described initially in the wiki here: https://battleacts8.ca/8/wiki/index.php?title=ISO.…
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In part a you generate the AEP curve using the three events given. You're told to simulate using the random number 0.86. This means finding the 86th percentile of the AEP curve.
The AEP curve is 0 until 0.8379 and then jumps up to 10m betw…
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This is one of those facts you have to memorize. In reinsurance the subject premium for a treaty is the cedant's premium net of any premiums for reinsurance inuring to the benefit of the treaty being priced.
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The third criterion for credibility must hold for any level of exposure. We picked random exposure numbers which demonstrate this criterion fails. You could have picked other exposure numbers (expected losses) such as 25,000 and 25,001 to demonst…