AIDA 182 FINAL PAPER 2026 AUTHENTIC
SOLVED COLLECTION
◉Ratemaking Methods. Answer: 1. Pure Premium - relies on past
experience and does not consider current rates
2. Loss Ratio - Actual loss ratio calc from incurred losses, earned
premiums. to modify existing rates (cannot determine rate for new
type of insurance and cannot be used without current rates). uses
two lr - actual and expected
3. Judgment Method - develop rates when data is limited . Based on
experience and judgment
◉Ratemaking Process Overview. Answer: Collect Data
Adjust data - reflect the current rate level, loss experience for future
development of past claims, trending
Calc overall indicated rate change
Determine territorial and class relativities
, Prepare rate fillings and submit to regulatory authorities as required
- schedule of proposed rates, statement about percentage change,
explanation of diff, data to support, expense provision data, target
profit provision, explanatory material
◉Ratemaking Factor Variances. Answer: Experience period - legal
requirements, variability over time, and creditability of the resulting
ratemaking data
trending
large loss limitations - those that do not exceed a predetermined
amount, cat events are excluded and replaced by a flat charge
credibility - predictive ability of data, higher volatility = more data
needed (0 = no cred, 1 = full cred)
increased limit factors
◉Insurer Y is using the pure premium ratemaking method in
estimating expenses per exposure unit based on the insurer's past
expenses. Insurer Y knows that incurred losses are $4 million
including loss adjustment expenses of $500,000. All other expenses
SOLVED COLLECTION
◉Ratemaking Methods. Answer: 1. Pure Premium - relies on past
experience and does not consider current rates
2. Loss Ratio - Actual loss ratio calc from incurred losses, earned
premiums. to modify existing rates (cannot determine rate for new
type of insurance and cannot be used without current rates). uses
two lr - actual and expected
3. Judgment Method - develop rates when data is limited . Based on
experience and judgment
◉Ratemaking Process Overview. Answer: Collect Data
Adjust data - reflect the current rate level, loss experience for future
development of past claims, trending
Calc overall indicated rate change
Determine territorial and class relativities
, Prepare rate fillings and submit to regulatory authorities as required
- schedule of proposed rates, statement about percentage change,
explanation of diff, data to support, expense provision data, target
profit provision, explanatory material
◉Ratemaking Factor Variances. Answer: Experience period - legal
requirements, variability over time, and creditability of the resulting
ratemaking data
trending
large loss limitations - those that do not exceed a predetermined
amount, cat events are excluded and replaced by a flat charge
credibility - predictive ability of data, higher volatility = more data
needed (0 = no cred, 1 = full cred)
increased limit factors
◉Insurer Y is using the pure premium ratemaking method in
estimating expenses per exposure unit based on the insurer's past
expenses. Insurer Y knows that incurred losses are $4 million
including loss adjustment expenses of $500,000. All other expenses
