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W= L .
ER0
Where
L = experience losses
E = experience earned exposure
R0 = current rate
Using all the above equations we get,
A= L / ER0
(1 - V- Q) / (1 + G)
= L(1 + G)
ER0 (1 - V - Q)
Substituting this value of A, in 1st formula, we get
L (1 + G)
R = E(1 - V- G)
10. Relationship between Pure Premium and
Loss Ratio Methods
P = L
A
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