Identify the four characteristics or features of the perils insuredagainst by property-casualty insurance. Rank the...

Identify the four characteristics or features of the perils insured against by property-casualty insurance. Rank the features in terms of actuarial predictability and total loss potential.

Solutions

Expert Solution

Property vs. Liability
1)Max losses are more predictable for property than liability.
Severity vs. Frequency
2)Loss rates more predictable on low-severity, high-frequency lines than high-severity, low-frequency lines.
Time of Exposure

3) Extent of expected losses more difficult to determine for long-tail exposure than short-tail exposure.
Inflation
4) Higher price level pushes up losses.
5) Social inflation due to growing willingness for large payouts.

jeff jeffy answered 1 year ago

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