Premium Calculation

In addition to the classification rate, companies are assigned an experience modification factor or mod based upon the claims activity of their specific business. It begins at one and then changes either upward or downward as the claims activity of the business changes. It is possible for the experience modification to change yearly, but it typically takes into account the past three years. The standard premium incorporates the mod and is calculated as follows  

Standard Premium = Manual Premium x Experience Modification Factor 

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Example 2.34 deals with actuarial considerations needed for premium calculations. The problem may be presented by assuming the following states that di system, the customer of an insurance company, may occupy Si = Healthy customer, S2 = Handicapped customer, and S3 = Dead customer. The following matrix clarifies the interaction between the states... 

An organization will have an insurance premium calculated annually for the coverage of its employees however, with the assistance of the organization s accountant, the premium may be divided between departments. Departmental workers compensation costs may then be offset against the allocated premium each month. This method will allow departments to recognize their costs and plan safety management in a pro-active fashion, to reduce the loss from injury experience. For example, the total workers compensation premiums for company XYZ may be 100 000 currency units (e.g. euro). 

NOTE Calculations for Premium Class drill pipe are based on formulas in Appendix A, API RP7C. Table is bused on API RP7C, tables 2.3 and 2.4. 

HIV/AIDS-induced mortality and morbidity of workers can result in significant economic loss to business, including direct cost due to increased insurance premiums paid by employers, costs due to increased benefits paid by employers, indirect costs due to lost time due to illness, lost and reduced productivity, and other costs, like cost to new training and hiring of staff. Famham and Gorsky (1994) used a Markov model to calculate the expected medical, disability, employee replacement, life insurance, and pension costs to a business firm in the US for an HIV-infected... 

Liu et al. (2002) also calculated the economic cost of an HIV infection for the employer. Based on a simulation model to predict the comprehensive lifetime economic costs of HIV-infected workers to an employer, they predicted total lifetime costs of US 90,000 for the employer, whereas 2/3 are direct expenses on health insurance premium, life insurance premium, benefits, etc., and 1/3 loss of productivity. 

Under utilities should be included the costs for items that enter the plant but do not enter directly into the material formulation of the products or by-products. This includes coal, oil, gas, electricity, water, air, and inert gases. The amounts of cooling, process, and potable water should each be specified. Potable water is water that can be used for drinking and food preparation. It is usually purchased from a nearby municipality. The average electrical power required, peak power required, and demand power need to be calculated. Demand power is the number of kilowatts of energy that the utility company agrees to supply on an uninterrupted basis. A premium price is charged for this power. 

Traditionally, insurance is the main mechanisms available to individuals and business to manage the financial consequences of risky events, such as natural hazards like windstorms and floods. Insurance companies used to work making each individual or business pay a premium to protect themselves against an uncertain loss. The premium is calculated by pooling risks across a large and diverse population considering the pool s expected losses. 

VSL is derived based on the monetary sum people are willing to pay for reducing the risk of fatality. An example of a suitable monetary sum is the price premium for a safe car, which together with risk reduction estimates for the safe car is sufficient to calculate a VSL. The WTP for As (the change in the risk to die) leads to the value of statistical life such as ... 

Recently, Nyman7 took a fresh look at the traditional approach presented in Figures 7.1 and 7.2, which dates back to Pauly.8 Nyman argues that Pauly overestimated the welfare loss attributable to insurance, because he unduly included the income effect on consumption, whereas it should have been subtracted to leave the price effect. The income effect to be subtracted is due to the income transfer from the healthy to the sick. The pure price effect of insurance is the change in consumption of medical care that would occur if a consumer who is already ill were to purchase a contract from an insurer to reduce the price of medical care in return for an actuarially fair premium . In order to calculate the extent of the welfare loss of the insurance - which Nyman understands as the transaction cost of the insurance itself - it would be necessary to apply the classical Slutsky equation, but in practice it has yet to be quantified. 

Considerable literature developed around the ability of numerical indices derived from graph theoretical considerations to correlate with S AR data. This was a source of mystery to me for some time. A colleague, loan Motoc, from Romania, with experience in this arena and a very strong intellect, helped me understand the ability of various indices to be useful parameters in QSAR equations [19-21]. loan correlated various indices with more physically relevant (at least to me) variables such as surface area and molecular volume. Since computational time was at a premium during the early days of QSAR and such indices could be calculated with minimal computations, they played a useful role and continue to be used. As a chemist, however, I am much more comfortable with parameters such as surface area or volume. 

Mercury cells, like dry cells, have a zinc anode and a use a mercuric oxide (HgO) cathode. The electrolyte is potassium hydroxide, KOH. These small, flat, metallic cells are widely used in watches, calculators, cameras, hearing aids, and other applications where small size is a premium. The reactions in the mercury cell are ... 

Finally, insurance companies cover risks only because they have accurate information about the incidence of damages in the population. Without such data, they cannot adequately calculate insurance premiums. ... 

Real interest rates, of course, do and should play a role in insurance prices because premiums are paid before claims are settled. So fufure claims must be discounted by the current real interest rate to calculate a break-even premium. When real interest rates rise, premiums decline when real interest rates decline, premiums rise. Smith (1989, 95) reports that interest rates have a significant and sizeable effect on premium levels. For every 1.0 percent increase in interest rates, premiums are reduced by 1.2 percent. 

This method can be extended analogously to 3 or more x variables, Like the other quick and dirty methods, it is an approximation to the best method, and should be used with judgement. Where time is at a premium and high-powered calculating equipment is not available, this approach may have some advantages, even though approximate. 

Feed and By-Product Pricing Basis. Table V shows the feed and by-product price basis used in our economic calculations. Separate price structures are shown for the United States and Europe. For each case the by-product prices are assigned two values (a) fuel value and (b) premium or chemical value. Pricing the by-products on each basis yields two values of ethylene production costs for each case considered. These... 

When an orifice size is calculated per the formulas in Chapter 7, one should use a valve with the next letter size up, as most manufacturers only supply their API valves in the above-mentioned orifices. Some manufacturers are able to adapt their valve to customized orifices (i.e., as close as possible to the calculated value) but this comes at a premium price. 

PANELIST SCHMID In all of our economics, we have calculated the required selling price for the total Btu output of the plant and presented the economics this way. This is admittedly an oversimplification, because it does not take into consideration any possible price differential between the gas and the liquids. However, we feel that a differential is justifiable. The gas is undoubtedly more of a premium product than the liquid, and without a controlled market there certainly would be a price differential. Exactly what this would be is open to question. This is really yet to be tackled. There are some ways of trying to... 

The coin toss example given here involves a priori probabilities. These are probabilities whose magnitudes can be calculated ahead of the event from the number of different ways in which a given event may occur or fail to happen. We are concerned here with actuarial probabilities, which are similar to estimates of chances used by insurance companies to calculate life insurance premiums. It is obviously impossible, for example, to estimate the life expectancy of a person who is now 21 years old by calculating the number of ways in which he or she may live or die. The life expectancy of an individual is equated to that experienced in the past by a large number of similar people. 

The stoichiometric hydrogen requirement to upgrade biomass pyrolysis liquids to premium fuels has been calculated through the following relation presented by Chronet and Overend [8] ... 

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