The expected loss ratio for a class of business is 60 percent.What change would be indicated in the level of rates under the loss ratio method if the actual loss ratio turned out to be 68 percent?
A)6.67 percent increase
B)13.33 percent increase
C)25.00 percent increase
D)33.33 percent increase

Question

Quizplus · Accepted Answer

The indicated rate change is calculated as (Actual Loss Ratio / Expected Loss Ratio) - 1. So, (68% / 60%) - 1 = 0.1333 or 13.33% increase.

The Expected Loss Ratio for a Class of Business Is