AIDA 182.06 Ratemaking Techniques Exam Questions and Correct Answers

actual loss ratio formula - CORRECT ANSWER-incurred losses divided by earned premiums adjusting premiums to current rate level - CORRECT ANSWER-calculate the premium for each policy in the experience period at current rate level; or, adjust historic premiums in total to current levels advisory organization - CORRECT ANSWER-an independent organization that works with and on behalf of insurers that purchase or subscribe to its services anti-selection - CORRECT ANSWER-attracting only higher-risk insureds bases of rate regulation - CORRECT ANSWER-adequate, not excessive, and not unfairly discriminatory basic limit - CORRECT ANSWER-the minimum amount of coverage for which a policy can be written; usually found in liability lines big data - CORRECT ANSWER-data that is too large to be gathered and analyzed by traditional methods calendar-year method - CORRECT ANSWER-a method of collecting ratemaking data that estimates both earned premiums and incurred losses by formulas from accounting records catastrophe model - CORRECT ANSWER-a type of computer program that estimates losses from future potential catastrophic events categories of data needed for ratemaking - CORRECT ANSWER-Iosses, both paid and incurred; earned premium and/or exposure information; expenses, including a profit and contingencies factor components of rates - CORRECT ANSWER-prospective loss costs; expense provision; profit and contingencies factor credibility - CORRECT ANSWER-the level of confidence an actuary has in projected losses; increases as the number of exposure units increases credibility factor ANSWER-the factor applied in ratemaking to adjust for the predictive value of loss data and used to mi