Which of the following statements is (are)true about the loss ratio method of class rating?
I.The pure premium is calculated,and it 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 rates based on this comparison. The pure premium method, not the loss ratio method, involves calculating the pure premium and loading it for expenses, profit, and contingencies.

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