Mahler has a section on how avg premiums in the trend series used to estimate the trend factor have to be adjusted for one time effect changes to premiums, so that they are on the same level. Should all of these adjustments also be applied to the historical EP used in determining the indicated rate change? I would think the answer is yes.
Here's my knowledge on adjusting premiums in the rate indication. It's good knowledge, right? lol.
1) You apply adjustments to historical EP and premium in the trend series used for estimating premium trend. These adjustments account for one time effects on the premium level and may include rate changes, law amendments, and discounts.
2) You apply a premium trend to historical EP to account for changes to premium levels that occur over time, like shifts in the mix of business, inflation, and the use of a rating plan that changes the average premium level over time.
Here's my knowledge on adjusting premiums in the rate indication. It's good knowledge, right? lol.
1) You apply adjustments to historical EP and premium in the trend series used for estimating premium trend. These adjustments account for one time effects on the premium level and may include rate changes, law amendments, and discounts.
2) You apply a premium trend to historical EP to account for changes to premium levels that occur over time, like shifts in the mix of business, inflation, and the use of a rating plan that changes the average premium level over time.
Direct Adjustments to Premium
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