Errata for the 2017 Exam 8 Cookbook
If you spot an error in the Exam 8 Cookbook, please quick send me a message so that I can correct the error and document it here for others. Thanks!
Many thanks to everyone who pointed out the errors corrected below:
Fisher - Limited Table M (10/13/17):
The entry ratio for the policy should be calculated based on the expected aggregate limited loss for the policy, which would be $540k * (1 - .12). This changes the calculation for the Limited Table M charge. See the fixed recipe below.
A couple of the risks have a higher limited loss than unlimited loss in the problem. That's a mistake on my part when I was creating the problem and making sure some of the calculations worked out nicely. This is corrected in the fixed recipe.
NCCI 2 - NCCI Retro Premium (9/30/17): The arrow in step 6 should say "Closest to 0.576."
Couret & Venter - Multi-Dimensional Credibility (9/24/17): In the discussion section, the VHM(W) arrow should be pointing to Cov(W,w), not Cov(V,w).
Grossi - Occurrence Exceedance Probability (9/10/17): The axes in the step 2 description are switched and the graph is correct. The x-axis is the Loss Size and the y-axis is the Occurrence Exceedance Probability (OEP).
Bahnemann - Risk Load (9/5/17): The problem should have the following changes:
The prompt should state "... including the risk load using the standard deviation method."
The k' formula should be: k / sqrt(E[N])
ULAE should be loaded as a percentage of Loss & ALAE (not just Loss)
Clark - Casualty Excess of Loss-Experience Rating (8/27/17): The premium in the problem should be labeled "Subject Premium" not "On Level Subject Premium."
Fisher - Table L (8/24/17): The prompt should say to calculate Table L charges and savings "from 0 to 1.25 in
increments of 0.25" instead of up to 1.5.
Couret & Venter - Quintiles Test (8/20/17): The credibility-weighted ratio for the overall HG in step 2 should be calculated as a weighted average using the even-year TT claims (.1628, not .1718). Here is the fixed version: Couret & Venter - Quintiles Test - Fixed
The errata below was corrected in the final version
Mahler - Credibility-Weighted Predictions (8/4/17): A subscript on the third Y in the written-out formula for the "Credibility Weight of the Most Recent Data and Previous Estimate" is incorrect. It should be Y_i-2, not Y_i-1. The correct formula is below:
Robertson - Weighted k-means Cluster Analysis (8/4/17): The subscript on the weight in step 1 is incorrect. The calculation shows w_A. It should show w_1 since this is the weight for class 1.
Couret & Venter - Multi-Dimensional Credibility (8/4/17): The calculation in step 1 is incorrect. I didn't include VHM when calculating Var(Vi) and Var(Wi). The rest of the calculation is off because of this. You can download the fixed recipe here: Couret & Venter - Multi-Dimensional Credibility - Fixed
GLM - ROC Curve (8/4/17): The denominators in the written-out formulas under step 3 are incorrect. Also, I accidentally wrote sensitivity a second time for the specificity formula. You can download the fixed recipe here: GLM - ROC Curve - Fixed