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4. Our actuarial department calculates rate level indications periodically by state, coverage, territory and other breakdowns. Although the entire process is complicated, it boils down
4. Our actuarial department calculates rate level indications periodically by state, coverage, territory and other breakdowns. Although the entire process is complicated, it boils down to calculating a projected loss ratio in some future time period divided by a permissible (target) loss ratio. Recall, Loss Ratio = Losses/Premium. If the permissible loss ratio is 81% and the projected loss ratio is 77%, by how much should the premium rates change in order to achieve the permissible loss ratio? Please write a few sentences explaining your choice and what it represents
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