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# RBC Charges (R5 - NWP Risk)

Calculate the R3 RBC charge for NWP risk for all lines.

current score:
0.000

 R5 total RBC charge for all lines basic R5 charge (WC) LSD (Loss Sensitive Discount) (WC) PCF (Premium Concentration Factor) (all lines)
 excessive growth charge 140
 PREMIUM & LOSS INFORMATION LOB 1 LOB 2 WC industry average L+LAE ratio (10 yr avg) 1.071 company average L+LAE ratio (10 yr avg) industry L+LAE ratio (current yr) adjustment for investment income company NWP (current yr) company U/W expense ratio (current yr) portion of reserves on retro-rated plan: next 2 lines – – – proportion that's direct loss-sensitive proportion that's assumed loss-sensitive R5 RBC charge after loss-sensitive discounts ?

#### Equation 4

R5 base RBC (WC)
=   (current yr NWP)   x   [ (C x A) + U - 1 ]

C
=   company RBC L+LAE ratio
A
U
=   company U/W expense ratio

C is a 50/50 weighting between:

industry L+LAE ratio
industry L+LAE ratio adjusted for company experience

industry L+LAE ratio adjusted for company experience
=   industry L+LAE ratio   x   (company average L+LAE ratio) / (industry average L+LAE ratio)

#### Equation 5

R5 after discount (WC)
=   R5 base RBC (WC)     LSD

LSD
=   R5 base RBC (WC)   x   (D% + A%)

D%
=   30%   x   (proportion that's direct loss-sensitive)
A%
=   15%   x   (proportion that's assumed loss-sensitive)

#### Equation 6

Final RBC after applying PCF (all lines)

=   (all lines RBC total before PCF)   x   PCF   +   (growth charge)

PCF
=   0.7   +   0.3 x (max NWP by line) / (total NWP)

Solution:
 R5 total RBC charge for all lines basic R5 charge (WC) LSD (WC) PCF (all lines) 0

 C industry L+LAE ratio industry L+LAE ratio adjusted for company experience A U