Premium discount

keshav1996keshav1996
in W-11-SpecialClassification

Hi. Please refer to the excerpt (attached below) from the premium discount section:

If taxes and profit do not vary with premium, so, why are we incorporating them in our calculation of premium discount offered for various layers i.e., why don't we just take column 8 as the sum of columns 4 and 5 and scrap off the current column 10 completely?

Thanks

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Comments

  • GrahamGraham

    That's fine. You'll get the same answer either way.

  • keshav1996keshav1996

    I get that incrementally the expense reduction % stays the same in column 9, as taxes and profit are constant, but then why do we need column 10? That is my main question - why do we need to divide column 9 percentages by (1- tax% - profit%) ?

  • GrahamGraham

    You don't. Your method will work.

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