Exposure Aggregation (CY)

judyohjudyoh
edited August 2023 in W-04-Exposures
Screen Shot 2023-08-19 at 11.09.53 AM.png
Screen Shot 2023-08-19 at 11.09.59 AM.png

Could you explain how to get WE (-0.25) for policy B?

Comments

  • GrahamGraham

    There are 2 policies of type B but let's first do the 2024 WE calculation for 1 policy. Then we can just double the answer to get the final result.

    • A 6-month policy written on Sept 15, 2023 would normally expire on Mar 15, 2024. (Recall that a 6-month policy written on that date would generate 6/12 = 0.5 car-years of written exposure for CY 2023.)
    • But this policy is cancelled on Jan 30, 2024, which is 1.5 months early.
    • That means 1.5/12 = 0.125 of written exposures must be reversed, and this reversal is credited to CY 2024.
    • So 1 policy of type B would generate -0.125 car-years of WE for 2024.

    Now just multiply -0.125 by the number of policies of type B to get the final answer:

    • -0.125 x 2 = -0.25 car-years for CY 2024.


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