Jones Questions

[ThePerfectGame]

1. Is the Average Date for Latest Trend Point (in 2-Step Trending) always 6 months prior to the end of the experience period, regardelss of policy term? (question stems from 2006 #26a)

2. How does one know when to treat a rate change as applying to all in-force policies vs. all policies effective on or after the date of the change? For example, according to the solution to 2005 #37a, "A 20% rate decrease was implemented effective July 1, 2003". I would interpret this to mean it would apply to all policies written on or after that date, however the sample solution suggests that the rate change applied to all in-force policies. Is there a keyword I'm not picking up on?

Thanks in advance!

[Almighty Malachi]

Originally Posted by ThePerfectGame

1. Is the Average Date for Latest Trend Point (in 2-Step Trending) always 6 months prior to the end of the experience period, regardelss of policy term? (question stems from 2006 #26a)

2. How does one know when to treat a rate change as applying to all in-force policies vs. all policies effective on or after the date of the change? For example, according to the solution to 2005 #37a, "A 20% rate decrease was implemented effective July 1, 2003". I would interpret this to mean it would apply to all policies written on or after that date, however the sample solution suggests that the rate change applied to all in-force policies. Is there a keyword I'm not picking up on?

Thanks in advance!

1) I don't think so.

2) What part of the sample solution gave you that idea? It's applying the 20% decrease to 1/2 of 2003's premium, and all of 2004's, not to all in-force...

FTR, there's like 4 threads on this question in particular, I think, not that they address your concerns specifically.

[ThePerfectGame]

2) What part of the sample solution gave you that idea? It's applying the 20% decrease to 1/2 of 2003's premium, and all of 2004's, not to all in-force...

Yeah, brain fart. I was on parallelogram method autopilot.

[triplea]

1) Yes, only because the last trend point is a 12-month moving average. If you were taking 6-month moving averages, the average date for the latest trend point in 2-step trending would be 3 months before the end of the experience period.

[ThePerfectGame]

1) Yes, only because the last trend point is a 12-month moving average. If you were taking 6-month moving averages, the average date for the latest trend point in 2-step trending would be 3 months before the end of the experience period.

Makes sense. I assume 12-month is implied unless otherwise stated?

[Almighty Malachi]

Originally Posted by triplea

1) Yes, only because the last trend point is a 12-month moving average. If you were taking 6-month moving averages, the average date for the latest trend point in 2-step trending would be 3 months before the end of the experience period.

He is right, i screwed up the steps

[ThePerfectGame]

Thanks, Almighty Malachi & triplea. I think I've got it straight now.

[ThaLetters]

Originally Posted by ThePerfectGame

Makes sense. I assume 12-month is implied unless otherwise stated?

yep. also, not really related to your question, but i think the 12 mo avg takes away the effects of seasonality.

[MathForMarines]

Originally Posted by ThaLetters

yep. also, not really related to your question, but i think the 12 mo avg takes away the effects of seasonality.

That is correct (if I am remembering my applied stats VEE correctly)

[triplea]

Originally Posted by ThaLetters

yep. also, not really related to your question, but i think the 12 mo avg takes away the effects of seasonality.

Not sure if that's correct....12 month moving averages smooth out random fluctuations.

You don't have to worry about seasonality for most lines of business

(Jones pg 12)