PDA

View Full Version : manual pages in rate filing


victorandjenny
03-14-2012, 12:43 PM
In WM Chapter 3, it says manual pages in rate filing can be used to estimate overall average premium level. I do not know exactly what the authors mean. My understanding is like the following:
In the rating manual, there is base rate for each coverage, limit factors, deductible factors and so on. If we assume we know the distribution of policyholder's coverages, limits, deductibles and so on, we can have a rough idea about the average premium level. It can be very very rough, because the distribution can be very different from our assumption, and if we consider territorial factors and tier factors can be very different from 1.0, our estimate will be far from accurate.
Do you have some good ideas to make the manual pages very helpful to estimate the overall average premium level?

Vorian Atreides
03-15-2012, 11:04 AM
For the Exam, I would focus on the considerations and complications of using competitive information more than trying to figure out how to get premium distribution of the competitor from their rate pages.

But to answer the question posed, I don't think that it's a "mathematical" process in determining their distribution. It'll be more of a "judgement" in looking at which factors moved and by how much.

If changes in a given rating factor results in a 5% increase overall, you can probably guess that those levels with the biggest changes are either not very heavily populated or a segment of their book that they're trying to "get rid of". Certainly those levels that are realizing a decrease in their rating factor will be indicative of a significant portion of their book or a segment they want to grow in (or both!).

But I would say that the bigger fish to fry with this what I pointed out in the first paragraph.