Pricing Flashcards
ULR (Ultimate Loss Ratio|)
expected average loss – net premium/expected loss
$1 base rate
you’re getting 1% of premium
$0.05 base rate
0.05% of premium
What are base rates based off
knowledge of the market
How does a small TIV effect the the base rate
higher base rate
What do the first 10% of values represent in terms of the base rate
50% of the base rate
What are the three types of pricing curves
Low, Medium or High
Low curve
more expected loss in lower layers
High curve
more expected loss in higher layers – higher frequency but low severity eg. EQ
What pricing curve do we use as standard
low
Conflagulation
buildings close together therefore could be same fire zone
How are fire and cat pricing dealt with
think of them as being separate
Expected Loss
net premium/total EI
For order
For order = for the whole layer not just our share
How do you calculate the RPI of a renewal
use the adjusted rate change
