Exam B-01, #11c

snpod5snpod5
in Practice Exam 3

Hi there! Can you help me understand why the answer key applies ( 1+ ULAE % ) to both the Loss & LAE ratio and the Fixed Expense ratio in the numerator of the indicated change?

  • If on the exam, we're given "incurred loss & LAE" and a ULAE ratio, I'm guessing the best course of action is to note an assumption - either that we were actually provided loss & ALAE (and need to apply the ULAE load) or that ULAE is included in loss & LAE already (and thus no additional ULAE load is needed). Does that seem like a fair approach?
  • Should the ULAE load ever be applied to the Fixed Expense ratio? I have a hunch this is a typo, but want to be sure I'm understanding correctly!

Thanks again!

Comments

  • GrahamGraham

    You are correct - that was a typo. I will correct that and upload the new version. Thanks!

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