CAS Exam 5 Practice Questions - CAS Exam 5 Basic Ratemaking And Estimating Claim Liabilities Exam

Which statement BEST describes when the loss ratio method is preferred over the pure premium method?

When exposures cannot be reliably measured but premium history is available When the insurer is launching a brand-new line with no prior premium When pure premium calculations indicate a negative rate When variable expenses exceed fixed expenses

Correct Answer:

When exposures cannot be reliably measured but premium history is available

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