Which of the following statements is (are) true about the loss ratio m

Which of the following statements is (are) true about the loss ratio method of class rating?

I. The pure premium is calculated, and it is loaded to cover expenses, profit, and contingencies.
II. The actual loss ratio is compared to the expected loss ratio, and the rate is adjusted accordingly.
A) I only
B) II only
C) both I and II
D) neither I nor II

ANSWER

Answer: B