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Old 05-05-2012, 01:36 AM
wellmabt wellmabt is offline
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Default 2011 #9

Question on the trend period for the losses in part B.

Annual loss trend is given as 2.2%. The question is on determining the number of years of trend to get from the experience period (2010 accident year) to the renewal/forecast year ("proposed rates will be in effect for one year beginning on Oct 1, 2011").

So we want to go from the average occurrence date of the experience period to the average occurrence date of the effective period.

TIA solutions as well as sample solution on CAS website shows 2 years. i.e 7/1/10 to 7/1/12.

I agree with the 7/1/10, but why 7/1/12? How is 7/1/12 the average occurrence date of loss for a period commencing 10/1/11 and in effect for one year? Why not 10/1/12?
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Old 05-05-2012, 01:54 AM
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FourKicks FourKicks is offline
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because they're 6-month policies.
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Old 05-05-2012, 02:00 AM
wellmabt wellmabt is offline
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Quote:
Originally Posted by FourKicks View Post
because they're 6-month policies.
Doink. Thanks. Okay, should have just gone to bed.
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Old 05-05-2012, 09:50 AM
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I made this same mistake. I am going to circle these things in my exam book.
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Old 05-05-2012, 12:42 PM
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Dedicated111 Dedicated111 is offline
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the first thing I write down when I do these problems, on the top line of my answer sheet, is the length of the policy term.
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