B.4. ISO Flashcards

1
Q

The ISO mod formula

A
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2
Q

What the EER adjusts for

A

The EER adjusts for the presence of the MSL. If there was no
MSL, then the EER would be equal to 1.

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3
Q

Standard method to get Company Suject Loss Cost

A
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4
Q

Calculating CSLC using Present Average Company Rate Method

A
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5
Q

Calculating CSLC using Historical Exposures at Present Company Rates
Method

A
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6
Q

Where to find definition of Basic Policy Limits

A

Rule 5A
The annual aggregate limits are not used to limit historical
losses according to Rule 5D part 1.

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7
Q

Eligibility for ISO schedule and experience rating

A

Credibility of 0.03 for schedule rating
Credibility of 0.07 for experience rating

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8
Q

Two components of Actual Experience Ratio

A
  1. Actual historical loss and ALAE limited by basic limits and
    the Maximum Single Loss (MSL)
  2. Expected future loss development from experience period
    losses
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9
Q

Calculating expected future development

A
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10
Q

Formula for Actual Experience Ratio

A
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11
Q

Differences between ISO and NCCI Experience Rating

A
  1. ISO Mod not in factor form, need to add 1.
  2. ISO credibility up to 100%, NCCI less than 100%
  3. ISO no-split plan, NCCI single-split plan.
  4. ISO includes ALAE, NCCI does not.
  5. No need to adjust for benefit levels in ISO.
  6. ISO adjusts for claims-made policies.
  7. ISO compares ultimate loss, NCCI uses undeveloped loss.
  8. ISO responds more to frequency, NCCI responds to
    frequency and severity.
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12
Q

Similarities between ISO and NCCI Experience Rating

A
  1. Typically same experience period.
  2. Other expenses are excluded.
  3. Detrend expected loss to historical levels.
  4. Both have loss limits on actual losses.
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