Been trying to lock this down, can anyone confirm or deny the following?
Let's say you have an aggregate limit, occurrence limit, expected primary losses and expected unlimited losses. The question is, what entry ratio should I use to determine the insurance charge?
If you’re looking for a charge for an aggregate limit using a Table L, the entry ratio is Aggregate Limit / Expected UNLIMITED Loss. This is despite that fact that Table L construction is based on Limited Losses. The reason is because the occurrence limit is already accounted for by the insurance charge.
If you’re looking for a charge for an aggregate limit using a Limited Loss Table M, the entry ratio is Aggregate Limit / Expected PRIMARY Loss. Because the occurrence limit is accounted for via an excess loss factor.
Similarly if using a Table M with the ICRLL approximation, the entry ratio is Aggregate Limit / Expected Primary Loss.
Let's say you have an aggregate limit, occurrence limit, expected primary losses and expected unlimited losses. The question is, what entry ratio should I use to determine the insurance charge?
If you’re looking for a charge for an aggregate limit using a Table L, the entry ratio is Aggregate Limit / Expected UNLIMITED Loss. This is despite that fact that Table L construction is based on Limited Losses. The reason is because the occurrence limit is already accounted for by the insurance charge.
If you’re looking for a charge for an aggregate limit using a Limited Loss Table M, the entry ratio is Aggregate Limit / Expected PRIMARY Loss. Because the occurrence limit is accounted for via an excess loss factor.
Similarly if using a Table M with the ICRLL approximation, the entry ratio is Aggregate Limit / Expected Primary Loss.
Table L vs Table LLM/M Entry Ratios
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