Given the disruption to many lines of business due to the pandemic, the assumption of uniformity that the Parallelogram method requires may no longer hold true. The goal of this presentation is to quantify the difference in indicated rate need when using the Parallelogram method versus the Extension of Exposures method when the uniformity assumption is violated. We will explore the effects of growth, shrinking, or a changing mix of business on the indicated rate need when using both methods of on-leveling premiums.
Learning Objectives:
Describe what changes to a book of business will violate the assumptions of the Parallelogram method.
List which changes to a book of business have an adverse impact indication calculations.
Quantify the difference in rate need when both methods of on-leveling are used.
