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Here it is lads:
In our preferred company we have a number of different tiers, with the goal that each tier has the same loss ratio. Assume that the current rating factor for tier A is 0.820 and the rating factor for tier C is 1.00. If the LR (loss ratio) is 77.8% for tier A and 87.3% for tier C, what should the rating factor be for Tier A? Note that the 77.8% loss ratio has been adjusted to the tier C base rate level. Show your work.
>pic related
coming from my retarded self, i figured since tier c is now your baseline (factor rating = 1), you'd just divide the adjusted tier a LR by the tier c LR to get ~0.89. thoughts?
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>>331672
Post an explanation of how the rating factor is calculated.
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>>331776
there is no further context for the problem. that's part of the issue. given that, i don't think that is information one needs to know to solve it. this is more like a gmat/standardized test question. it has to do with insurance, but i don't think they expect you to know much about it. the problems should be fairly self-contained
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