a) Calculate the earned car-years for calendar year 2011. b) Calculate the earned car-years for policy year 2010 evaluated as of December 31, 2010 and as of December 31, 2011. c) Assume Policy Group B cancels on January 1, 2011. Calculate the 2010 policy year written car- years evaluated as of December 31, 2010 and as of December 31, 2011 for Policy Group B. d) Assume Policy Group B cancels on July 1, 2011. Calculate the 2010 and 2011 calendar year written car-years for Policy Group B

a) Calculate the earned car-years for calendar year 2011. b) Calculate the earned car-years for policy year 2010 evaluated as of December 31, 2010 and as of December 31, 2011. c) Assume Policy Group B cancels on January 1, 2011. Calculate the 2010 policy year written car- years evaluated as of December 31, 2010 and as of December 31, 2011 for Policy Group B. d) Assume Policy Group B cancels on July 1, 2011. Calculate the 2010 and 2011 calendar year written car-years for Policy Group B

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Given the following information for an insurance company that writes 24-month term policies:
Number of
Vehicles
50
100
Policy Group
A
B
Effective Date
January 1, 2010
Expiration Date
December 31, 2011
July 1, 2010
June 30, 2012
All policies within each group have the same effective date.
(a) Calculate the earned car-years for calendar year 2011.
(b)
Calculate the earned car-years for policy year 2010 evaluated as of December 31, 2010 and as of
December 31, 2011.
(c)
Assume Policy Group B cancels on January 1, 2011. Calculate the 2010 policy year written car-
years evaluated as of December 31, 2010 and as of December 31, 2011 for Policy Group B.
(d) Assume Policy Group B cancels on July 1, 2011. Calculate the 2010 and 2011 calendar year
written car-years for Policy Group B.

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Step 1: (a) Earned car-years for calendar year 2011

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Step 2: Earned car-years for the policy year 2010 evaluated as of December 31, 2010, and as of Dec 31, 2011

Step 3: Question C)

Step 4: Question D)

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