Fall 2018 Q12 a)
Why can we just rebase the indicated relativity to get the answer? I thought because in the question, the third bullet point says "the proposed overall rate level change is 0%", we have to find the relativity change i.e. make the total indicated relativity have no change from the current relativities.
Comments
Part (a) is just a standard application of the adjusted pure premium method. It's in part (b) where you take into account that the overall change has to be 0%. You do this by calculating the off-balance and adjusting the base rate (not the relativities) to achieve the 0% change.