The exposure is split into three geographic regions: region A, region B and region C. The following accident year 2 data is available:

Region	Current relativity	Exposure	Projected Ultimate loss
A	1.1	2,500	450,000
B	1	5,000	850,000
C	1.2	2,000	400,000

The insurer is targeting an 8% overall increase in rates. Using the pure premium method, determine the rate change % for region A.

• +4.87%
• +5.05%
• +5.53%
• +5.9%
• +6.33%

According to the pure premium method, the indicated rate differential for geographic region [math]i[/math] is the projected pure premium for region [math]i[/math] divided by the projected pure premium for the base region:

Region [math]i[/math]	[math]R_{i,I} [/math]
A	18/17
B	1
C	20/17

Given a targeted overall change factor of 1.08, the indicated change factor for the base rate equals

[[math]] 1.08 \cdot \frac{\sum_{i} w_i R_{C,i}}{\sum_{i} w_i R_{I,i}} = 1.0962. [[/math]]

The change factor for region [math]i [/math] equals the change factor for the base level multiplied by the change factor of the indicated differential for region [math]i[/math]:

Region	Change Factor	Rate Change
A	1.0553	+5.53%
B	1.0962	+9.062%
C	1.0747	+ 7.47%