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

712 INCORPORATION OF FIXED EXPENSESEXHIBIT 2-BCompanyState XX HomeownersProjected Fixed and Variable Expense Provisions:Proposed MethodFixedVariable(1) General Expenses $36.01 1.5%(2) Other Acquisition Expenses $55.28 2.2%(3) Taxes, Licenses and Fees $1.99 2.1%(4) Commission and Brokerage Expenses $– 13.5%(5) Total $93.28 19.3%EXHIBIT 2-CCompanyState XX HomeownersCalculation of Indicated Rate Change:Proposed Method(1) Statewide Projected Average Premium at Present Rates* $850.59(2) Statewide Projected Loss and LAE Ratio 64.7%(3) Statewide Projected Average Loss and LAE [(1) £ (2)] $550.33(4) Projected Average Fixed Expense Per Exposure $93.28(5) Variable Expense Provision 19.3%(6) Profit and Contingencies Provision 5.0%(7) Variable Permissible Loss Ratio [100% ¡ (5) ¡ (6)] 75.7%(8) Statewide Projected Average Required Premium [(3) + (4)]=(7) $850.21(9) Indicated Rate Change (8)=(1) ¡ 100% 0.0%*Countrywide data were used in the example.