Trending expenses

keshav1996keshav1996
in W-07-OtherExpenses

Hi Graham,

For trending the expenses incurred at policy inception if needed, we should apply the same logic like in case of trending losses and premium, right? So, like for trending a commission and brokerage expense from a historical period, we should start the trend period from AWD of CY historical period only or the mid point of the historical period? Wiki article says it should be the mid point. I am slightly confused as that would break the consistency.

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Comments

  • GrahamGraham

    The AWD of a CY historical period is the same as the midpoint of the CY historical period.

  • keshav1996keshav1996

    So, won't it create inconsistency with the following rule we use for trending premiums-

    image.png

    I took this from the Wiki article from the chapter on Premiums

  • GrahamGraham

    Those are the formulas given in the text so that's what you should use when solving a problem.

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