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A Note On The Parallelogram Method For Computing The On-Level Premium, David P.M. Scollnik, Wai Man Sara Lau
A Note On The Parallelogram Method For Computing The On-Level Premium, David P.M. Scollnik, Wai Man Sara Lau
Journal of Actuarial Practice (1993-2006)
This paper discusses the differences appearing in the descriptions of the parallelogram method for the determination of earned premium at current rate levels given by McClenahan (1996) and Brown and Gottlieb (2001). It observes that the former is consistent with the method of extending exposures while the latter is not. An illustration is provided. This paper also discusses two other approaches to the determination of the earned premium.
Predicting Automobile Insurance Multi-Regional Base Pure Premiums, Edward Nissan, Iskandar S. Hamwi
Predicting Automobile Insurance Multi-Regional Base Pure Premiums, Edward Nissan, Iskandar S. Hamwi
Journal of Actuarial Practice (1993-2006)
Multi-regional insurance base premiums are customarily computed by a top-down method where national or state projections are adjusted to reflect regional differences. This paper proposes a methodology for a bottom-up projection. A weighing scheme that minimizes the variance of the estimator is suggested as a criterion to establish an overall multi-regional rate.
On The Equivalence Of The Loss Ratio And Pure Premium Methods Of Determining Property And Casualty Rating Relativities, Robert L. Brown
On The Equivalence Of The Loss Ratio And Pure Premium Methods Of Determining Property And Casualty Rating Relativities, Robert L. Brown
Journal of Actuarial Practice (1993-2006)
There are two distinct stages in the property and casualty ratemaking process. First, there is the portfolio average rate change. Second, there is the adjustment of classification relativities. It is well known that the loss ratio and pure premium (also called the loss cost) methods are algebraically equivalent in the stage called the portfolio average rate change. This paper reviews the proof of this equivalence. Further, it is proved algebraically that the loss ratio and pure premium methods are also equivalent in calculating classification relativities (or differentials) if certain data requirements can be met. A short numerical example of this …