Page 131 - Commercial - Underwriting Mandates & Guidelines Binder

Motor Traders
5.4.5 If there is still an unexpired portion in respect of the current year, trend as follows:
• gross claims ÷ expired months x 12
• add 7.5% for claims incurred but not reported (IBNR)
• multiply by 125%
5.4.6 Premium calculation is based on a 65% loss ratio.
5.4.7 Ensure that the calculated premium is not less than the minimum rate required.
Example:
1 April
R500 000
R2 500 000
R200 000 R150 000 R75 000
R200 000 x 145% = R290 000 ÷ 65% = R446 153
Say R450 000 R150 000 x 135% = R202 500 ÷ 65% = R311 538
Say R320 000
11 months
R75 000 ÷ 11 x 12
= R81 818 + 7.5%
= R87 955 x 125%
= R109 944 ÷ 65%
= R169 145
Say R170 000
R450 000 + R320 000 + R170 000
= R940 000 ÷ 3
= R313 333
Say R320 000
(R320 000 ÷ R500 000) x %
= 64% (based on own damage limit)
Renewal date
Own damage limit
Third party limit
Period of cover
Period of cover
Notes
Calculation
Year 3
(01/04/2015 to 31/03/2016)
Gross claims x trend
Projected claims ÷ loss ratio
Premium required
Rounded up to the nearest 10 000
Year 2
(01/04/2016 to 31/03/2017)
Gross claims x trend
Projected claims ÷ loss ratio
Premium required
Rounded up to the nearest 10 000
Year 1
(01/04/2017 to 18/02/2018)
No. of months expired
Annualised gross claims
Annualised claims + IBNR
Sum x trend
Projected claims ÷ loss ratio
Premium required
Rounded up to the nearest 10 000
Average premium required
Sum of premiums per year
Average for 3 years
Premium required
Rounded up to the nearest 10 000
Rate on own damage
Premium ÷ own damage limit x %
Rate
Commercial Underwriting Mandates and Guidelines – Binder – Version 4 2022
129
Gross claims
01/04/2015 to 31/03/2016
01/04/2016 to 31/03/2017
01/04/2017 to 18/02/2018