Which of the following statements is (are)true about the loss ratio method of class rating?
I.A premium is calculated,and the pure premium is loaded to cover expenses,profit,and contingencies.
II.The actual loss ratio is compared to the expected loss ratio,and the rate is adjusted accordingly.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

The loss ratio method involves comparing the actual loss ratio to the expected loss ratio and adjusting the rate based on this comparison. Statement I describes the pure premium method, not the loss ratio method.

Which of the Following Statements Is (Are)true About the Loss