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#1
03-22-2011, 04:51 PM
 victorandjenny Member CAS Join Date: Jan 2008 Posts: 113
2003#33

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.
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#2
03-22-2011, 09:50 PM
 Vorian Atreides Wiki/Note Contributor CAS Join Date: Apr 2005 Location: Garroting Deep Studying for CAS Exam 7 College: Hard Knocks Favorite beer: Sam Adams Cherry Wheat Posts: 27,765

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. [/]
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#3
03-22-2011, 11:54 PM
 victorandjenny Member CAS Join Date: Jan 2008 Posts: 113

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

Quote:
 Originally Posted by 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. [/]
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