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In our preferred company we have a number of different tiers, with the goal that each tier has the same loss ratio. Assume that the
In our preferred company we have a number of different tiers, with the goal that each tier has the same loss ratio. Assume that the current rating factor for tier A is 0.820 and the rating factor for tier C is 1.00. If the LR (loss ratio) is 77.8% for tier A and 87.3% for tier C, what should the rating factor be for Tier A? Note that the 77.8% loss ratio has been adjusted to the tier C base rate level. Show your work.
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