Can somebody explain to me the basis for the third point "the mid point of exposure from the new rating period is 1 sept 2014". I was thinking this was outside the n ew rating period. Or am i missing something.
You need to find the average claim date under the new rates, not the average policy start date. The question says policies will be sold under the new rates from 1st Nov 2013 to 30th June 2014. We therefore need to work out when is the average claim date for policies sold between these dates: The average policy will be sold on 1st March 2014. The average claim on this policy will therefore be 6 months later, ie 1st September 2014. An alternative way of thinking about this is: For policies sold on 1st Nov 2013, the average claim date is 1st May 2014. For policies sold on 30th June 2014, the average claim date is 31st Dec 2014. The mid-way point between 1st May and 31st Dec is 1st September 2014. In the exam, you would need to state your assumptions, eg policies are annual, incepting evenly between 1st Nov 2013 and 30th June 2014, and risk is earned evenly over the policy term.
