calculating premium for non-yield based plans

jxtang97jxtang97
in Chev.Agric

Hi Graham,


I get how to derive the liability$ for yield-based vs. non-yield based
However, in the NEXT step, calculating the IndemRt requires rearranging to get Indem$/L$

I have 3 questions:
1) how are we supposed to derive the Idem$ for NON-yield plans if the formula involving AP/GP is not applicable? Do we just assume the IndemRt for non-yield plans will always be given?
2) there is an extra variable - the "Deductible" - in the calculation of compensation for non-yield plans - how do we include this in our calculation?
3) does the source text provide any illustrative examples of how to calculate indem/premium for non-yield plans that you could include in the wiki? would be much clearer to see numerical examples!

Thanks!

Comments

  • Staff_J1Staff_J1
    edited September 7

    1) Without recent exams and not many prior exam questions to work with, yes I would think so! Also, I think if there is stuff to work with from the question such that you can calculate IndemRt (based on AP, GP, etc), I would say calculate it but also state your assumption on why!
    2) You include the deductible by reducing the payable units before applying the price. This is an example from the source material
    Indemnity = max(0, units affected -deductible x insured units) x insured price per unit
    = (25 -5% x 250) x 800 = 10,000
    3) See above! I've included an example for indemnity calculation for a non-yield plan. Will try and see if there is a good example for premium..

    Hope this helps-Thanks!

  • jxtang97jxtang97

    Thank you! Very helpful - appreciate the extra example! :smiley:

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