Page 320 - ic92 actuarial

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C. The loss should be accidental from the view point of the
insured.

D. The expected loss over some reasonable period of time
should be estimable.

E. None of the above.
Ans. D

11. Under loss ratio method of the rate making process

the following information is available :

Total premium related expense factor =0.25

Profit and contingency factor = 0.05

Ratio of non-premium related expenses to losses = 0.075

Calculate the target Loss ratio and indicate the correct

answer from below :

A. 0.65 B. 0.86

C. 0.76 D. 0.55

T= I-V-Q
1 +G

= 1 - .25 - 0.05 = .7 = .65
1 + 0.075 1.05

Ans. A

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