2003#33

[victorandjenny]

The question is asking about adjust the year 2002 written premium to current level, but the answer is calculating earned premium, why?

When there came the law amendment, all poilicies written are still valid, so we would adjust this way:
1.1*1.05*1.07/(1.1*0.75+1.1*1.05*0.25)

Is this right?

Thanks.

[Vorian Atreides]

Note that the period in question is policy year 2002 (the diagram will look like a parallelogram--as shown by the bolded lines in the sample solution).

And the sample answer provided is correct--meaning that yours is not.

Your average rate level for 2002 (the denominator) is incorrect (note that there is a time at rate level 1.00).



[side note] Also, with PY, WP = EP. [/]

[victorandjenny]

Thanks. I got it. I thought it was about written premium, which was very unusual to adjust.

Note that the period in question is policy year 2002 (the diagram will look like a parallelogram--as shown by the bolded lines in the sample solution).

And the sample answer provided is correct--meaning that yours is not.

Your average rate level for 2002 (the denominator) is incorrect (note that there is a time at rate level 1.00).



[side note] Also, with PY, WP = EP. [/]