Notation - Pricing

TEXT NOTATION

The text contains a significant number of formulae. The following is a summary of the key notation that appears throughout the text. Actual references in the text may specify more precise definitions (e.g., L could be used to describe accident year reported losses, policy year ultimate losses, etc.).

X	Exposures
P, P	Premium, Average premium (P divided by X)
Pc, Pc	Premium at current rates, Average premium at current rates (Pc divided by X)
PI, PI	Indicated premium, Average indicated premium (PI divided by X)
Pp, Pp	Premium at proposed rates, Average premium at proposed rates (Pp divided by X)
L, L	Losses, Pure Premium (L divided by X)
EL, EL	Loss Adjustment Expense (LAE), Average LAE per exposure (EL divided by X)
EF, EF	Fixed underwriting expenses, Average underwriting expense per exposure (EF divided by X)
EV	Variable underwriting expenses
F	Fixed expense ratio (EF divided by P)
V	Variable expense provision (EV divided by P)
Qc	Profit percentage at current rates
QT	Target profit percentage
Bc	Current base rate
Bp	Proposed base rate
R1C,i	Current relativity for the ith level of rating variable R1
R1P,i	Proposed relativity for the ith level of rating variable R1
Ac	Current fixed additive fee
Ap	Proposed fixed additive fee