PROCEEDINGS May 15, 16, 17, 18, 2005 - Casualty Actuarial Society

560 ARCHITECTURE FOR RESIDENTIAL PROPERTY INSURANCE RATEMAKINGEXHIBIT 6A-Florida Insurance CompanyHomeowners Rates Effective 1/1/2004Base Rates for Modeled Perils[A] Var. U/W Expense Ratio: 21.7%Allocation of Reinsurance Costs to Policy Form–Hurricane[1] [2] [3] [4] [5]Policy Base Value CY 2002 2002 Base 2002 Alloc. IndicatedForm Insured House-Yrs. Earned TVI Re. Expense Reins. LoadHO2/3/9 100,000 72,765 7,276,499 7,191,638 98.83HO4/6 10,000 3,290 32,896 32,512 9.88Total 76,055 7,309,394 7,224,150Modeled Base Rates for Hurricane and Other Wind[6] [7] [8] [9] [10]Hurricane Reinsurance Indicated Other Wind IndicatedForm Loss Cost Fixed Load Base Rate Loss Cost Base RateHO2/3/9 135.24 98.83 298.95 33.64 42.96HO4/6 ¤ 9.02 9.88 24.14 2.24 2.86[A] from Exhibit 1, includes profit load[1], [2] from company data[3] = [1] £ [2][4] total = [9] from Exhibit 4, then allocated on [3][5] = [4]=[2][6], [9] from cat model for HO 2,3,9; scaled by ratio of base coverage amounts for HO 4,6[7] = [5][8] = ([6] + [7])=(1 ¡ [A])[10] = [9]=(1 ¡ [A])¤ Ratio of base coverage amounts reflects Cov. A + B + C + D