What is included and excluded in rate calculations?

willm7

Hi,

• BattleCard#8 mentions that only expected losses are included and admin costs are shared between federal and provincial governments.
• The pop quiz in Section 4b says that "starting with expected Indem$, you would load in a bunch of stuff like expenses to arrive at the Prem$ you have to charge".

This seems contracdictory to me. Can anyone provide some explanations please?

Thanks!

graham

Hi @willm7
I had a medical emergency today (Thursday) so I will hopefully get to your question sometime over this Fri/Sat/Sun.
@graham

willm7

No rush! As long as someone answers within the next 2 months Thanks!

graham

Hi @willm7

I just looked into this and it's possible that section isn't even on the syllabus anymore. I sent the following question to the CAS and am waiting for their response:

There appears to be an inconsistency between the Exam 6-Canada syllabus and the Exam 6-Canada study kit regarding the Chevalier reading on agricultural risk management programs:

• The table of contents page in the study kit specifies pages 1-8 only, excluding page 6.
• The syllabus however does not specify a page range (aside from the page 6 exclusion) which implies the entire reading is included.

Can you provide clarification on which pages are covered?

graham

The CAS responded and stated there was a typo in the study kit. It should not have specified the page range 1-8. In other words, the whole reading is covered.

Getting back to the original question, I shouldn't have mentioned "expenses" in the "extra stuff" that needs to be loaded into the premium rate. Starting with the indemnity rate, the 5 items that are loaded in to get the final premium rate are:

• uncertainty margin
• balance-back factor
• individual discount/surcharge
• reinsurance load
• self-sustainability load

willm7

That makes sense to me. Thank you