AIDA 182 STUDY GUIDE 2026
COMPREHENSIVE ANSWER DIGEST
◉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
are $1.5 million. The earned-car years used in the calculations are
100,000. The expenses per exposure unit are. Answer: B. $15.
Correct. The expenses per exposure unit are $15, calculated by
dividing all other expenses of $1.5 million by earned car year of
100,000.
◉Using the pure premium ratemaking method with a five percent
profit and contingencies factor, Insurer C's pure premium is $45. Its
cost of issuing a policy and collecting the premium, is $2.50 per car-
year regardless of Insurer C's premium size, rating class, or rating
territory. Its other underwriting expenses such as commissions and
premium tax, vary by premium size. Insurer C's variable expense
equal 10 percent of the final premium. The rate per exposure unit
rounded to the nearest dollar would be. Answer: The rate per
exposure unit rounded to the nearest dollar would be $56. The rate
per exposure unit = (Pure Premium $45 + Fixed expenses per unit
COMPREHENSIVE ANSWER DIGEST
◉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
are $1.5 million. The earned-car years used in the calculations are
100,000. The expenses per exposure unit are. Answer: B. $15.
Correct. The expenses per exposure unit are $15, calculated by
dividing all other expenses of $1.5 million by earned car year of
100,000.
◉Using the pure premium ratemaking method with a five percent
profit and contingencies factor, Insurer C's pure premium is $45. Its
cost of issuing a policy and collecting the premium, is $2.50 per car-
year regardless of Insurer C's premium size, rating class, or rating
territory. Its other underwriting expenses such as commissions and
premium tax, vary by premium size. Insurer C's variable expense
equal 10 percent of the final premium. The rate per exposure unit
rounded to the nearest dollar would be. Answer: The rate per
exposure unit rounded to the nearest dollar would be $56. The rate
per exposure unit = (Pure Premium $45 + Fixed expenses per unit
