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ed999
11-04-2005, 06:33 PM
i have gc prem = 638.1K and retro prem = 630.5K.

and for b, they might be different because of the additional CI term for the retro prem formula.
PAC
11-07-2005, 02:55 PM
Are you sure you don't have GCP and RP reversed in your post?

If so, my calcs agree with yours.
ed999
11-07-2005, 02:58 PM
that's what i meant. sorry
ramanujan
11-07-2005, 03:05 PM
and for b, they might be different because of the additional CI term for the retro prem formula.

I don't think they would be different because of CI term. I = unlimited loss - loss after max and min limitation. If the plan is balanced, that is I and BP factor are appropriate, the E(GCP) = E(RP).

I wrote that expected premiums would be different if the plan is not balanced.
ed999
11-07-2005, 03:14 PM
well i think we said similar things. i think i showed them the for mula for gc prem and retro prem. there's that extra "CI" term in there. if the plan is in balance, then CI is 0, right, which makes gc = retro. agree?
ramanujan
11-07-2005, 03:28 PM
No. CI does not have to be zero for the plan to be balanced.
ed999
11-07-2005, 03:34 PM
look at q 2001, the solution is similar to yours. "If the retro plan is in balance, which is a function of the selected max and min prem, and WHICH ULTIMATELY PRODUCES A ZERO NET INSURANCE, then the resulting retro will equal the gc…"
but it did mention the 0 CI
ramanujan
11-07-2005, 03:48 PM
look at q 2001, the solution is similar to yours. "If the retro plan is in balance, which is a function of the selected max and min prem, and WHICH ULTIMATELY PRODUCES A ZERO NET INSURANCE, then the resulting retro will equal the gc…"
but it did mention the 0 CI

q 2001? which one is that?

CI will be zero only if Table M charge = savings, which is not necessary for a balanced plan. Sorry.
ed999
11-07-2005, 03:51 PM
q32 i believe from 2001
ramanujan
11-07-2005, 04:06 PM
E(Retro Plan loss ratio) = E(GC loss ratio) - Insurance charge

In 2001 #32, retro plan loss ratio = GC loss ratio. Hence Insurance charge has to be zero. This is a special case, does not apply in general.
cmlarson
11-07-2005, 04:57 PM
I don't know which paper this is from, but somewhere I read that the GC premium and the Retro premium will only be the same if the risks used to create the Table M are similar to the risks that are being retrospectively rated.

Did anyone put something like that?
Avi
11-07-2005, 05:37 PM
I put that if the basic premium is calculated properly, E[R] = GCP, which it was not in this case.
PAC
11-07-2005, 05:53 PM
I don't know which paper this is from, but somewhere I read that the GC premium and the Retro premium will only be the same if the risks used to create the Table M are similar to the risks that are being retrospectively rated.

Gillam/snader, p. 38, discuss this...without the use of "only" and with more details on when GCP and RP may not be equal.