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09-10-2006, 07:22 PM
I'm using All 10, and looking at question # 30 from the 1996 exam. The question asks for "Total Limitation Charge". I can't find anything in Gillam and Snader, or the NCCI plan that defines what the "Total Limitation Charge" is. The question involves a retro plan, with a loss limitation elective.

In the solution, it defines Total Limitation Charge as

Net Insurance Charge ("In this case excluding the LCF")
+ Excess Loss Premium ("in this case excluding the LCF")

Once you know this, it's an easy enough calculation, but I wonder how I was supposed to know what this means. Am I missing something, like a definition somewhere (in another reading?), or is it just common sense that the above is what the total limitation charge is?

Thanks for any help.

Pack Fan
09-11-2006, 02:57 PM
The terminology comes from another Retro paper that was previously on the Exam. Robbin's "Overlap Revisted: The Insurance Charge Reflecting Loss Limitation Procedure."

Sew Lining
10-10-2006, 11:35 AM
Is this an inconsistency with ALAE treatment?

Gillam and Snader II seems to indicate that the loss conversion factor may contain ALAE in addition to ULAE - "c = The loss conversion factor for expenses which vary with loss."

The NCCI Retro Manual, however, seems to exclude ALAE from the loss conversion factor.

Which view is correct?

great3981
09-22-2008, 03:35 PM
Is this an inconsistency with ALAE treatment?

Gillam and Snader II seems to indicate that the loss conversion factor may contain ALAE in addition to ULAE - "c = The loss conversion factor for expenses which vary with loss."

The NCCI Retro Manual, however, seems to exclude ALAE from the loss conversion factor.

Which view is correct?

:bump:

I was thrown by this and one other question in this year's RR manual, both related to expenses.

Question 1: Part 1-A-9 (page 15) talks about Stock and Non-Stock Company Expense ratio tables. "This Plan includes tables of expense ratios for use by stock and non-stock companies, to be used by each company in accordance with the expense table adopted by the company"

And if you look in Part 4-D (page 107), we indeed find three expense ratio tables, two for a Type A Company and one for a Type B Company.

Are "Type A" and "Type B" the same as a stock and non-stock company? If so, which is which? If not, what are "Type A" and "Type B"? I note that Type A expense ratio tends to be less than Type B, and more so for large risks.

Question 2: The third table (page 111) is "Excluding ALAE". Can someone confirm my understanding if the insured chooses the "ALAE Option" (loss is Loss and ALAE, as defined on Part 1-II-L, page 27) retrospective rating plan versus "Loss only" retrospective rating plan.

We have two formulas:
b = e - (c-1)E + cI
P = (b + cL)T

ALAE option:
- e does not include ALAE
- c does not include ALAE
- E does not include ALAE
- L does include ALAE

"Loss only":
- e does include ALAE
- c does include ALAE
- E does include ALAE
- L does not include ALAE

Agree? Would any other factors change?

BassFreq
10-19-2008, 03:46 PM
Question 1: Part 1-A-9 (page 15) talks about Stock and Non-Stock Company Expense ratio tables. "This Plan includes tables of expense ratios for use by stock and non-stock companies, to be used by each company in accordance with the expense table adopted by the company"

And if you look in Part 4-D (page 107), we indeed find three expense ratio tables, two for a Type A Company and one for a Type B Company.

Are "Type A" and "Type B" the same as a stock and non-stock company? If so, which is which? If not, what are "Type A" and "Type B"? I note that Type A expense ratio tends to be less than Type B, and more so for large risks.

On ALAE, I would think that E would have to go the same way as L, but that's just a guess on my part.

But I really came here to see if anyone knew about Type A and Type B. Anyone know?

triplea
10-19-2008, 06:29 PM
I think Type A vs Type B might be stock vs non-stock company. But then again, I am not sure.

frank_exams
10-21-2008, 01:52 AM
Type A is stock and Type B is non-stock, though I don't think they say so in the manual.

As to great's other suggestion, I think E should follow L, otherwise no quibbles.

Frank

BassFreq
10-21-2008, 07:04 AM
Thanks, Frank!