An insurer is considering a rate change for annual policies that will be written in calendar year 4. The experience period used to determine the rate change is accident year 1. If loss cost inflation is 1.5% per year, what is the trend factor ?

Suppose an insurer makes the following rate changes for annual policies during three calendar years:

Calendar year 2 earned premium totaled 10M. Using the parallelogram method, determine the the on-level earned premium for calendar year 2.

• 10,250,000
• 10,509,200
• 10,556,176
• 10,591,769
• 11,021,000

Suppose an insurer makes the following rate changes for annual policies during three calendar years:

Calendar year 3 earned premium totalled 5M. Using the parallelogram method, determine the the on-level earned premium for calendar year 3.

• 5,036,500
• 5,142,049
• 5,149,167
• 5,150,159
• 5,197,500

An insurer is considering a rate change for annual policies that will be written in calendar year 5. The experience period used to determine the rate change is policy year 3. If loss cost inflation is 2% per year, what is the trend factor ?

• 1.0301
• 1.0404
• 1.05
• 1.051
• 1.0612

An insurer is considering a rate change for semi-annual policies that will be written from 08/01/CY5 to 07/31/CY6. The experience period used to determine the rate change is policy year 1. If loss cost inflation is 4% per year, what is the trend factor ?

• 1.17
• 1.1853
• 1.1867
• 1.201
• 1.2167

A rate change for annual policies will affect policies sold during the period January 01, 2021 to December 30, 2023. You are given the following:

• There are no fixed underwriting expenses.
• Variable expenses are 25% of premium.
• Pure premium including LAE for policy year 2019 was $500.
• Loss inflation is 5% per year.

Using the pure premium method and a target profit percentage of 20%, determine the rate per exposure unit during the period January 01, 2021 to December 30, 2023.

• 826.86
• 890.46
• 909.09
• 1,027.24
• 1,052.36

You are given the following information:

• Fixed underwriting expenses are negligible.
• Variable expenses are stable and equal 10% of premium.
• Projected pure premium, including LAE, for the forecast period equals $1,500.

If the indicated rate per exposure unit equals $2,000, determine the target profit percentage.

• 10%
• 15%
• 20%
• 25%
• 30%

You are given the following:

• The current rate per exposure unit equals $750.
• Without inflation, projected pure premium equals $550 over the next twelve months.
• Without inflation, fixed underwriting expenses equal $50 per exposure unit.
• Aggregate exposure over the next twelve months is uniformly distributed through time.
• The annual loss inflation rate is 4%.
• Fixed underwriting expenses grow at an annual rate of 2%.
• Loss adjustment expenses are negligible.

If the insurer leaves rates unchanged, determine the upper bound on the variable expense % which ensures that the underwriting profit on policies sold in the next 12 months will exceed 15% of written premium.

• 1.25%
• 1.53%
• 1.66%
• 2%
• 2.25%

An insurer is considering a rate change that will be in effect for the next calendar year. The following is assumed:

• The projected ultimate loss and LAE ratio at current rates equals 75%.
• Fixed underwriting expenses are negligible.
• Variable expenses are 15% of premium.
• The target profit is 20% of premium.

If the insurer uses the loss ratio method for ratemaking, determine the % change in the rate.

• 14.75%
• 15.1%
• 15.38%
• 15.75%
• 16.33%

An insurer is considering a rate change that will be in effect for the next calendar year. The following is assumed:

• The projected ultimate loss and LAE ratio at current rates equals 75%.
• Fixed underwriting expenses are negligible.
• Variable expenses are 15% of premium.
• The target profit is 20% of premium.

If the insurer uses the loss ratio method for ratemaking, determine the % change in the rate.

• 14.75%
• 15.1%
• 15.38%
• 15.75%
• 16.33%