Page 143 - ic92 actuarial

Foundations of Casualty Actuarial Science

Q9. Discuss the concept of composite rating.

Ans. Composite rating is an administrative tool to facilitate
the rating of large, complex risks upon audit.

Instead of rating different coverage using different
exposure bases, all applicable coverage are rated using
one, composite, exposure bases.

The references to insurance company's loss and A:Ae
development factors, factors from claims-made to
occurrence and vice vers, loss and ALAE trend factors
to current year, exposure trend factors, and expected
loss and ALAE ratios reflect that different insurance
companies may use different factors and ratios.

ISO supplies advisory loss and ALAE development
factors, factors from claims-made to occurrence and
vice versa, loss and ALAE trend factors to current
year, and exposure trend factors but does not supply
advisory expected loss and ALAE ratios.

Sashi Publications - www.sashipublications.com 143

Copyright@ The Insurance Times. 09883398055 / 09883380339