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Reading: BASIC RATEMAKING, Fifth Edition, May 2016, Geoff Werner, FCAS, MAAA & Claudine Modlin, FCAS, MAAA Willis Towers Watson

Appendix B: Homeowners Indication

Study Tips

Alice's Mega-Pro-Tip:   Appendix B is an example of a Pure Premium Indication but it contains new material not covered in the main chapters of Werner.

Unfortunately, Appendix B contains new material and you will have to spend considerable time studying this problem type.

The ranking table lists this reading as Rarely Asked but that's because it has not appeared on an exam since 2015. Note however that the 2015 question was worth 4.5 points. That would be a giant hit on your score if you were to miss it completely. I'm tempted to think that the CAS has decided this type of problem is no longer important but there is no way to know for sure. If you are really pressed for time, you could skip this appendix, or at least memorize the 5 components. (See further down for what these are.)

This wiki article provides examples of how to lay out your solution in a step-by-step way. Once you're done the practice problems you can try the old exam problems.

Estimated study time: 2 days (not including subsequent review time)

BattleTable

Based on past exams, the main things you need to know (in rough order of importance) are:

• how to do a pure premium homeowners indication - includes a catastrophe component and an AIY component (Amount of Insurance Years)

reference	part (a)	part (b)	part (c)	part (d)
E (2015.Fall #7)	ultimate loss - calculate	PP method - calculate rate change
E (2014.Fall #5)	PP method: - loss & LAE provision
E (2013.Fall #8)	PP method - calculate rate change

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