W&M Ch 8 Flashcards
1
Q
Pure Premium Method
A
2
Q
Loss Ratio Method
A
3
Q
Loss Ratio vs Pure Premium Methods
A
-LR method relies on loss ratio
–requires premium at current rate level
–if difficult or not available, PP approach is preferred
-PP method uses pure premium
–requires clearly defined exposures
–if not available, LR approach is preferred
- LR method produces indicated change to current rates
- PP produces an indicated rate
–PP must be used with new line where there are no current rates to adjust
