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Ragab Abouhamad: Calculating Insurance Premiums

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Ragab Abouhamad: Calculating Insurance Premiums

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Questions and Answers

What is the formula to calculate the rate per exposure unit by pure premium method?

Incurred losses + Loss adjustment expenses / Exposure units

Pure premium + Expenses per exposure unit / (1 - Profit and contingences factor) (correct)

Pure premium / Expenses per exposure unit

Earned premium - Expenses provision / Exposure units

How is the pure premium calculated in the given problem?

Incurred losses + Loss adjustment expenses / Exposure units (correct)

Earned premium - Expenses provision / Exposure units

Incurred losses - Loss adjustment expenses / Exposure units

Expenses / Exposure units

What is the value of expenses per exposure unit in the given problem?

SR 14

SR 12.5

SR 13.5

SR 13 (correct)

What is the formula to calculate the Expenses per exposure unit?

Expenses per exposure unit = Expenses / Exposure units Signup and view all the answers

What is the purpose of the profit and contingences factor in the rate per exposure unit calculation?

To account for uncertainty and risk in the calculation Signup and view all the answers

What is the value of the rate per exposure unit in the given problem?

SR 56.45 Signup and view all the answers

What is the purpose of the Loss Ratio method in ratemaking?

To adjust an existing insurance rate to reflect changing conditions Signup and view all the answers

What is included in the expenses provision in the Loss Ratio method?

Profit and contingencies Signup and view all the answers

What is the result of adding the expected loss ratio and expenses provision in the Loss Ratio method?

Equal to 100 percent Signup and view all the answers

What is the formula to calculate the Rate per exposure unit?

Rate per exposure unit = Pure premium + Expenses per exposure unit Signup and view all the answers

What is the purpose of the expenses per exposure unit in the rate calculation?

To adjust the pure premium upward Signup and view all the answers

What is the primary factor that rates or premiums for insurance are based on?

Past experience of losses Signup and view all the answers

What is the purpose of loading the expected claim payments in actuarial calculations?

To accommodate underwriting, management, and claims handling expenses Signup and view all the answers

What is the formula for calculating the pure premium?

Pure premium = incurred losses + L A E / Exposure units Signup and view all the answers

In the pure premium method, what is the purpose of the earned car-years?

To serve as the exposure units Signup and view all the answers

What is the primary role of an actuary in an insurance company?

To calculate the rates and reserves Signup and view all the answers

What is the significance of the 5% profit and contingences in the pure premium method?

It represents the desired profit margin Signup and view all the answers