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Exolain when the actuarv uses an exnnsure trend fartor Answer the following questions using the...

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Accounting

Exolain when the actuarv uses an exnnsure trend fartor
Answer the following questions using the table below:
a. Calculate the loss cost for each policy year.
b. Calculate the trended loss cost for each policy year.
c. Calculate the average trended loss cost.
\table[[Policy Year,\table[[Estimated],[Ultimate]],OBEs,Loss Cost,Loss Trend
\table[[Exposure],[Trend]],\table[[Trended],[Loss Cost]],],[2011,2,200,000,848,,1.062,1.000,],[2012,2,224,000,848,1.051,1.000,,],[2013,2,679,000,848,1.041,1.000,,],[2014,2,711,000,848,1.030,1.000,,],[2015,2,958,000,848,1.020,1.000,,],[2016,2,880,000,848,1.010,1.000,,]]
Average Trended Loss Cost
4. Explain why the average trended loss cost is understated.
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