Hi, Puzzled as to why we'd apply the 50% loss ratio to the expected reinstatements in order to get the premium? Surely the rate on line multiplied by the expected reinstatement width is the expected premium? Thanks in advance
Hi 12345, You're correct in saying that you would multiply the rate on line by the expected amount of cover to be reinstated. However, the sentence immediately before part (vi) states that the reinstatement premiums are now to be charged at 50% of the original premium - so this is where the 50% multiplier comes from. Coralie
