Spring 2018 #18
Can you help me understand what's going on with NWP growth rates for the R5 calculation in Spring 2018 #18 part a examiner's report? I don't quite understand why the NWP growth rates get capped at 40%. I'm also confused on why this was the process as opposed to the typical PCF calculation (I see that there is no LSD).
Comments
Here is the wiki note regarding the 40% cap:
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#Week_2:Day_5.28R5.29:~:text=(average%20growth%20over%20last%203%20years)%20is%20capped%20at%2040%25%20for%20each%20year
The reason for the cap is probably to limit the charge for excess growth to within reason.
The insurer writes a single line, so the PCF is 1. Excess growth charge is different from premium concentration adjustment.
Would the answer to part a of this question probably be $.750M now because we should assume/include an operational charge of 3%?
Yes, correct.
Hi, can you help me understand this?
Given the following additional information:
• The insurer has no loss sensitive policies
• Loss and LAE reserves are $50 in both 2016 and 2017
• The excessive growth factor for R5 is 0.225
why they are given? it looks like they are not used to solve the question.
is it unnecessary information?
Thanks
There is an adjustment to R5 related to loss-sensitive policies. No LSP means that adjustment is not applied.
Excessive growth factor is used in the related charge.
I can't think of a reason for needing the 50 loss info, so that may have been fodder information.