What are the benefits of economic freedom.

(@) (1.5 points) Define the following terms associated with Table M in a retrospective rating plan: (i) The entry ratio, r (ii) The Table M charge, o(r) The Table M savings, w(r) A risk may have loss ratio 30%, 40%, 50%, 60%, or 70%, each with equal probability. (b) (3 points) Complete the following Table M for this risk: ofr ) w(r) 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 (c) (0.5 points) Explain how Table L differs from Table M.(5 points) You are calculating a risk margin for claim liabilities using the methodology set out in "A Framework for Assessing Risk Margins." The risk margin is to be calculated at the 75% adequacy level and is to be based on the following sources of uncertainty, which are assumed to be mutually independent: Source of Uncertainty Independent Internal External Risk Systemic Risk Systemic Risk Coefficient of 8% 16% Variation 6% The central estimate of claim liabilities is 216.000,000. Claims are assumed to be normally distributed. The =-value of the 75th percentile of the normal distribution is 0.674. (a) (0.5 points) Calculate the combined coefficient of variation for all sources of uncertainty. (b) (0.5 points) Calculate the amount of the risk margin. (/ point) Describe two areas of additional analysis that you may conduct to provide further comfort regarding the outcomes from the deployment of this framework. (d) (/ point) Identify four approaches that can be used to analyze independent sources of risk. One of the attractions of this framework is that each of the sources of uncertainty being analyzed can be aligned with the central estimate analysis and appropriate decisions around volatility made in the context of that analysis. Your actuarial student proposes analyzing risk margins at the same granular level as used for central estimate valuation purposes. (e) (2 points) Evaluate your student's proposal