Insurance Ratemaking: Pure Premium, Loss Trends & Rate Indications

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Split Brackwater Auto Insurance's 2025 written auto premium into the part earned in 2025 and the unearned rest, and measure the earned exposure in car-years.
• Split Brackwater Auto Insurance's five accident years of auto losses into claim frequency and severity, multiply them back into the pure premium and get the all-years figure right.
• Measure the annual trend in Brackwater Auto Insurance's pure premium, work out the trend period from the experience period to the future policy period, build the trend factor and chart the history with a trendline.
• Develop Brackwater Auto Insurance's reported losses to ultimate with given age-to-ultimate factors, trend each accident year to the future policy period and total the projected losses.
• Build Brackwater Auto Insurance's rate level index from two rate changes, average it per calendar year with the parallelogram shares, and restate five years of earned premium at the current rate level.
• Compute Brackwater Auto Insurance's on-level loss & LAE ratios, weight the five accident years, turn the result into an indicated rate change with the expense and profit provisions and apply it to the current average premium.
• Total Brackwater Auto Insurance's variable expense ratio, derive the permissible loss ratio and load the pure premium with fixed expenses, variable expenses and profit into the indicated gross rate per car-year.
• Turn Brackwater Auto Insurance's pure premium by driver age into indicated relativities against the base class, compare them with the current ones in a chart and rate four policies with base rate × territory factor × class relativity.