J
Jun Wu
Member
Dear All
Hope you are well.
For burning cost questions, is it correct that we don't need to apply rate change to the exposure (if it is a monetary amount) to bring it to the level of the rating period? We do this for inflation for loss amounts, so why not exposure?
I have only seen burn cost calculation questions where we are given the exposure in say number of cars, premium volume, but never has to on level it. Therefore my burn cost is = trended loss / original exposure for each year.
But for pricing for reinsurance treaty questions, we always have to find on level loss ratio which involves adjusting premium to the rating period level.
Am I missing something?
Thanks and good weekend!
Jun
Hope you are well.
For burning cost questions, is it correct that we don't need to apply rate change to the exposure (if it is a monetary amount) to bring it to the level of the rating period? We do this for inflation for loss amounts, so why not exposure?
I have only seen burn cost calculation questions where we are given the exposure in say number of cars, premium volume, but never has to on level it. Therefore my burn cost is = trended loss / original exposure for each year.
But for pricing for reinsurance treaty questions, we always have to find on level loss ratio which involves adjusting premium to the rating period level.
Am I missing something?
Thanks and good weekend!
Jun