Revision as of 18:25, 25 July 2024 by Admin (Created page with "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 ? <ul style="list-style-type:upper-alpha" class="d-none"> <li>1.0301</li> <li>1.0404</li> <li>1.05</li> <li> 1.051</li> <li>1.0612</li> </ul>")
ABy Admin
Jul 25'24
Exercise
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
ABy Admin
Jul 25'24
The midpoint of policy year 3 is the end of calendar year 3 and the midpoint of the forecasting period is the end of calendar year 5. Hence the trend factor equals 1.02 2 = 1.0404.