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(Created page with "'''Key: E''' Let P be the premium prior to the October 1, CY1 rate change. After the change, the premium is 1.07P and on July 1, CY2 it becomes 1.10(1.07)P = 1.177P. The rele...") |
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The upper left triangle for CY2 has area (1/2)(1/4)(1/2) = 1/16 and the lower right triangle has area (1/2)(1/2)(1) = 4/16. The weighted average is [1 + 4(1.177) + 11(1.07)]P/16 = 1.092375P. The factor is (1.177×.94)/(1.092375) = 1.0128. | The upper left triangle for CY2 has area (1/2)(1/4)(1/2) = 1/16 and the lower right triangle has area (1/2)(1/2)(1) = 4/16. The weighted average is [1 + 4(1.177) + 11(1.07)]P/16 = 1.092375P. The factor is (1.177×.94)/(1.092375) = 1.0128. | ||
{{soacopyright | 2023}} | {{soacopyright | 2023}} | ||
Latest revision as of 01:33, 8 August 2024
Key: E
Let P be the premium prior to the October 1, CY1 rate change. After the change, the premium is 1.07P and on July 1, CY2 it becomes 1.10(1.07)P = 1.177P. The relevant parallelogram is:
The upper left triangle for CY2 has area (1/2)(1/4)(1/2) = 1/16 and the lower right triangle has area (1/2)(1/2)(1) = 4/16. The weighted average is [1 + 4(1.177) + 11(1.07)]P/16 = 1.092375P. The factor is (1.177×.94)/(1.092375) = 1.0128.
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.