I'm reading Mahler's study guide on ISO CGL Experience and Schedule Rating and am getting confused as to which components of AER and EER are subject to MSL.
EER = expected L&ALAE subject to MSL / expected L&ALAE not sub to MSL.
The numerator of AER is subject to MSL because MSL is applied to actual losses and ARULL is hit with EER.
But what about the denominator of AER, company subject BL L&ALAE? Page 230 states that it is subject to the MSL, but would this cause a mismatch between AER and EER in calculating the mod? It seems like it would because the numerator and denominator of the AER are both subject to MSL but only the numerator and not the denominator of EER is subject to MSL.
Thanks in advance.
EER = expected L&ALAE subject to MSL / expected L&ALAE not sub to MSL.
The numerator of AER is subject to MSL because MSL is applied to actual losses and ARULL is hit with EER.
But what about the denominator of AER, company subject BL L&ALAE? Page 230 states that it is subject to the MSL, but would this cause a mismatch between AER and EER in calculating the mod? It seems like it would because the numerator and denominator of the AER are both subject to MSL but only the numerator and not the denominator of EER is subject to MSL.
Thanks in advance.
AER and EER components with respect to MSL
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