Under the pure premium method of determining class rates,the gross rate is determined by which of the following formulas?
A)pure premium/(1 + expense ratio)
B)pure premium/(1 - expense ratio)
C)(1 + pure premium)/expense ratio
D)expense ratio/(1 - pure premium)

Question

Quizplus · Accepted Answer

The pure premium method calculates the gross rate by dividing the pure premium by (1 - expense ratio) to account for expenses and profit loading.

Under the Pure Premium Method of Determining Class Rates,the Gross