Chapter 0.5: Pricing

Question 1

Factors that influence the choice of pricing?

[3]

Answer 1

• Class of business being priced
• Availability of relevant data
  -Market in which the company is operating

Question 2

What is the cost plus approach?

Answer 2

Risk premium plus loadings = office premium

Question 3

Loadings that should be added to the risk premium.

[5]

Answer 3

• Cost of reinsurance
• Expenses
• Cost of capital
• Risk margin / safety loading
• Taxes / levies

Question 4

Methods that can be used to calculate the risk premium.

[4]

Answer 4

• Burning cost
• Frequency severity
• Multivariate model
• Original loss curve