Hi, I want to know if the denominator in right hand side of the 2nd equation gives the premium at time to in terms of premium rate time 1 for renewed policy after removing the effects due to changes in exposure, rating factor, coinsurance share ( other wise limits) and all? This model can be easily extended to allow for other factors (for example, claim inflation in excess of exposure change, change in rating factors and change in policy duration). This model can be easily extended to allow for other factors (for example, claim inflation in excess of exposure change, change in rating factors and change in policy duration). This model can be easily extended to allow for other factors (for example, claim inflation in excess of exposure change, change in rating factors and change in policy duration). This model can be easily extended to allow for other factors (for example, claim inflation in excess of exposure change, change in rating factors and change in policy duration). What does change in rating factors mean? Is it like new rating factor may be identified in time t2 compared to t1 and rated in terms of rates at t1? This is quite confusing. Please clarify.
Then how is premium rating done at time t2 for a new rating factor that is added in t2 using the same rating factor basis as at t1 for a renewed policy. Because such a rating factor didn't exist at t1 hw does it get accounted for while rating it in the basis at t1.
Maybe it means that one can identify the effect of each added or omitted rating factor on the overall rate. Eg. adding an additional factor increased the rates by 5 %. I am guessing here.
