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- TIA EXAM 5 - WERNER CH 08
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Pure Premium Method
Loss Ratio Method
Loss Ratio versus Pure Premium Methods
LR method relies on loss ratio
:
Requires premium at current rate level;
If difficult or not available, PP approach is preferred
PP method uses pure premium:
Requires clearly defined exposures;
If not available, LR approach is preferred
LR method produces indicated change to current rates
PP produces an indicated rate
:
PP must be used with new line where there are no current rates to adjust
What does the equivalency of these methods depends on?
Consistent Data & Assumptions
If not, possible that different approaches produce different results (i.e. paralellogram vs. EOE)
Author
CDP
ID
71159
Card Set
- TIA EXAM 5 - WERNER CH 08
Description
- TIA EXAM 5 - WERNER CH 08
Updated
2011-03-07T01:58:19Z
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