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Calculating Exposure

O

obri600

Member
In the chapter on claim analyses (Chapter 24, section 4.1, page 23) it says one of the ways in which exposure can be calculated is by grouping policy data by common dates of inception, for example, within calendar months, and allocate the exposure of the group on a proportional basis.

Can anyone give an example of how this works in practice?
 
So, for example, if you take all policies written in December 2007 (that's your common date of inception), then you can say that for those policies, they are exposed for half a month on average during 2007 (assuming written evenly over the month, and risk uniform over the month, and annual policies) and 11.5 months exposure during 2008. Just like the 24ths method of calculating UPR.
 
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