Data Preparation For Ratemaking

Front 1

What is another name for the chain ladder method?

Back 1

Loss development Triangle Methodlo

Front 2

General formula for Loss Reserves?

Back 2

Estimated Ultimate Losses - Losses Paid to Date

Front 3

Another Formula for Loss Reserve

Back 3

Case Reserve + IBNR Reserve

Front 4

For trending losses, it’s always the what of the period?

Back 4

The midpoint

Front 5

Trending Losses Historical PY data:

Back 5

Length of term = k+1 where k = policy term

Front 6

Trending Losses Historical AY data:

Back 6

Length of term is 1 year

Front 7

Trending Losses Future

Back 7

Length = policy term and how long the new rates are in effect

Front 8

Indicated Average Relativity:

Back 8

Weighted average of indicated relativities using earned exposures

Front 9

Current Average Relativity

Back 9

Weighted average of current relativities using earned exposures

Front 10

Off Balance Factor:

Back 10

Indicated Average Relativity/Current Average Relativity

Front 11

Balance Back Factor

Back 11

1/Off Balance Factor

Current Average Relativity/Indicated Average Relativity

Front 12

Indicated Average Rate Change Loss Ratio Method

Back 12

(LR+ F)/(1-V-Qt) - 1

Front 13

LR formula for the Loss Ratio Method

Back 13

LR = Losses/Premium

Front 14

Formula for F Indicated Average Rate Change Loss Ratio Method

Back 14

Fixed Expenses/ Premium

Front 15

Indicated Average Rate Pure Premium Method

Back 15

(L+Ef)/(1-V-Qt)

Front 16

Formula for L Indicated Average Rate Pure Premium Method

Back 16

Losses/number of exposures

Front 17

Ev is called what?

Back 17

Variable expenses

Front 18

Ef is called what?

Back 18

Fixed expenses

Front 19

Variable Expense Ratio V

Back 19

Ev/P

Front 20

Fixed Expense Ratio F

Back 20

Ef/P

Front 21

Formula for New Relativity

Back 21

Z•IR + (1-Z)•CR

Front 22

Formula for Limited Average Severity (LAS)

Back 22

(Σmin(xi,u))/n

Front 23

LAS(u) is the empirical version of what?

Back 23

E[X^u]

Front 24

Formula for ILF

Back 24

(LAS(u)+RLu)/(LAS(b)+RLb)

u = increased limit

b= original limit

Risk Load (RL) function will be provided by the question if needed

Front 25

One formula for the Indicated Relativity

Back 25

Indicated Relativity = ILF

Front 26

Formula for Loss Elimination Ratio

Back 26

(LAS(d)-LAS(b))/(x- LAS(b))

Front 27

Another formula for Indicated Relativity

Back 27

1-LER

Front 28

What is Li called for the pure premium method?

Back 28

Pure Premium

Front 29

What is the formula for the Pure Premium Li?

Back 29

(Developed and Trended Losses)/(Earned Exposures)

Front 30

What is the formula for indicated relativity under the Pure Premium Method?

Back 30

Li/Lbase

Front 31

Policy Year Historical Length

Back 31

1 year + length of policy term (remember to always take the midpoint of the interval)

Front 32

What is another name for the loss development technique?

Back 32

Chain Ladder Method

Front 33

n-year volume weighted loss development factor

Back 33

Use the last n years of losses

Front 34

A probability is just what?

Back 34

The integral of the pdf

Front 35

BF weighted average formula of chain ladder method and loss reserve

Back 35

R= wRcl + (1-w)Rlr

Where w= 1/fult

Front 36

For the BF reserves, what does (1- 1/fult) represent?

Back 36

The portion of unpaid claims

Front 37

If there is no basic deductible for the loss elimination ratio, what does the formula become?

Back 37

LAS(d)/x

It’s normally (LAS(d)-LAS(b)/(x-LAS(b)) but LAS(b) just equals 0

I had a practice problem with this

Front 38

Quota share reinsurance?

Back 38

Both parties share a percentage of the total risk

Front 39

Surplus Share Reinsurance

Back 39

Both parties share a percentage of the total risk above the retention limit