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Key Facts: CAS Exam 5 Exam

~40%

Recent Pass Rate

CAS published results

4 hours

Exam Length

Computer-based, MC + essay

~$1,200

Exam Fee

CAS 2026

350-500 hrs

Recommended Study

CAS candidate community

Apr & Oct

2026 Sittings

Apr 14-21, Oct 19-27

7 topics

Content Areas

Ratemaking + reserving syllabus

CAS Exam 5 is a 4-hour CBT covering basic ratemaking and reserving for U.S. property-casualty insurance. The roughly 40% pass rate reflects its difficulty: candidates must master pure premium and loss ratio methods, parallelogram on-leveling, chain ladder, Bornhuetter-Ferguson, Cape Cod, frequency-severity development, classical and Buhlmann credibility, and IBNR/IBNER estimation. Topic weights are Ratemaking 20%, Loss Development & Trend 20%, Premium Adjustments 10%, Loss Adjustments 15%, Expense & Profit 10%, Credibility 10%, Reserving 15%. Total cost runs about $1,200 including the CAS exam fee. Most candidates study 350-500 hours and need MAS-I and MAS-II passed before sitting. The 2026 sittings run April 14-21 (Spring) and October 19-27 (Fall).

Sample CAS Exam 5 Practice Questions

Try these sample questions to review concepts for the CAS Exam 5 exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the pure premium method of ratemaking, the indicated rate per exposure unit is calculated as:

A.Pure premium divided by (1 minus variable expense ratio minus profit provision)

B.Pure premium multiplied by (1 plus fixed expense ratio plus profit provision)

C.Experience loss ratio divided by target loss ratio

D.Pure premium plus fixed expenses, divided by target combined ratio

Explanation: The pure premium method indicated rate equals Pure Premium / (1 - V - Q), where V is the variable expense ratio and Q is the profit and contingencies provision. Pure premium is loss and LAE per exposure, trended and developed to ultimate. The denominator grosses up the loss cost to recover variable expenses and profit, while fixed expenses are added in the numerator as a per-exposure load.

2The loss ratio method computes the indicated rate change as:

A.(Experience loss ratio plus fixed expense ratio) divided by target loss ratio, minus 1

B.Experience loss ratio divided by (target loss ratio plus variable expense ratio)

C.(Pure premium plus fixed expense per exposure) divided by current rate

D.Target loss ratio multiplied by (1 plus trend factor)

Explanation: The loss ratio method gives an indicated rate change = (Experience LR + Fixed Expense Ratio) / Target LR - 1. The target loss ratio equals 1 - V - Q (variable expense ratio plus profit provision). Because the loss ratio method only produces a change to current rates, it requires that the existing rate structure already reflect a defensible relativity between classes.

3Which statement BEST describes when the loss ratio method is preferred over the pure premium method?

A.When exposures cannot be reliably measured but premium history is available

B.When the insurer is launching a brand-new line with no prior premium

C.When pure premium calculations indicate a negative rate

D.When variable expenses exceed fixed expenses

Explanation: The loss ratio method requires premium history but not a stable exposure base, so it is preferred when exposures are hard to measure or quantify (e.g., commercial liability where payroll restatements occur). The pure premium method requires reliable exposures and is preferred for new lines without rate history because it produces an indicated rate rather than a rate change.

4An actuary computes pure premium of $250 per exposure. Variable expenses are 18%, fixed expenses per exposure are $30, and the profit and contingencies load is 5%. The indicated rate per exposure is closest to:

A.$324

B.$364

C.$295

D.$280

Explanation: Indicated rate = (Pure Premium + Fixed Expense per Exposure) / (1 - V - Q) = (250 + 30) / (1 - 0.18 - 0.05) = 280 / 0.77 = $363.64, or approximately $364. The fixed expense load is added in the numerator on a per-exposure basis, while variable expenses and profit are recovered through the denominator gross-up.

5For the loss ratio method, an experience period shows a loss and LAE ratio of 65%, fixed expense ratio of 8%, variable expense ratio of 20%, and target profit of 5%. The indicated rate change is closest to:

A.+2.7%

B.-2.7%

C.+8.0%

D.-8.0%

Explanation: Target loss ratio = 1 - V - Q = 1 - 0.20 - 0.05 = 0.75. Indicated change = (LR + Fixed Expense Ratio) / Target LR - 1 = (0.65 + 0.08) / 0.75 - 1 = 0.9733 - 1 = -2.67%, approximately -2.7%. A small negative indication means current rates slightly exceed required, so a rate decrease of about 2.7% is indicated.

6Which of the following is the BEST reason to use accident year data rather than calendar year data for ratemaking analysis?

A.Accident year data matches losses to the period in which the underlying events occurred, providing a cleaner measure of loss costs

B.Calendar year data is harder to obtain from accounting systems

C.Accident year data is required by Schedule P for Annual Statement filing

D.Accident year data automatically excludes prior accident year reserve development

Explanation: Accident year aggregation matches losses to the period of occurrence, supporting matched-period loss cost calculation alongside earned exposures or earned premium from the same period. Calendar year combines current activity with prior accident year reserve changes, distorting current loss cost measurement. Accident year data does include reserve development as it emerges, which is why loss development factors are then applied.

7Which of the following BEST describes a credible exposure base for personal auto liability?

A.Earned car years

B.Vehicle miles driven

C.Insured driver age

D.Number of policies in force

Explanation: Earned car years is the standard exposure base for personal auto liability ratemaking because it directly reflects the unit of risk insured (a car for a year), is reasonably proportional to expected losses, is easily measured, and is widely accepted by regulators. Vehicle miles driven is more proportional to risk in theory but is harder to verify and is the basis of pay-per-mile programs.

8Three desirable characteristics of a ratemaking exposure base are that it should be:

A.Proportional to expected loss, practical to measure, and not subject to manipulation

B.Maximally correlated with premium volume regardless of loss patterns

C.A single fixed dollar amount per policyholder for simplicity

D.Identical across all classes within a line of business

Explanation: A good exposure base is (1) proportional to expected loss so that rates per exposure are reasonably stable across classes, (2) practical to measure and verify by underwriters and auditors, and (3) not easily manipulated by insureds to reduce premium. Examples: payroll for workers' compensation, sales for general liability, square footage for property, car years for auto.

9The fundamental insurance equation expresses that premium should equal:

A.Losses plus LAE plus underwriting expenses plus underwriting profit

B.Losses divided by exposures plus a profit loading

C.Losses divided by 1 minus the expense ratio

D.Indicated rate multiplied by trend and development factors

Explanation: The fundamental insurance equation is Premium = Losses + LAE + Underwriting Expenses + Underwriting Profit. Ratemaking is the process of estimating each component prospectively (trended and developed losses, projected expenses, and a target profit margin) to set a rate that balances the equation over the rating period.

10Which of the following ratemaking objectives is generally considered MOST important from the regulator's perspective?

A.Rates should not be excessive, inadequate, or unfairly discriminatory

B.Rates should maximize the insurer's underwriting profit

C.Rates should always reduce premium for the insured

D.Rates should be uniform across all classes regardless of risk

Explanation: State insurance regulators evaluate rate filings against the standard that rates not be excessive (overcharging), inadequate (threatening solvency), or unfairly discriminatory (charging different rates without supporting risk differences). This standard is codified in most state insurance codes and is the primary regulatory test applied to rate filings.

About the CAS Exam 5 Exam

CAS Exam 5 (Basic Ratemaking and Estimating Claim Liabilities) is the first CAS upper-level exam, covering property-casualty ratemaking methods, on-level premium and exposure adjustments, loss development and trend, credibility, expense and profit provisions, and unpaid claim estimation. The 4-hour computer-based exam blends multiple-choice and constructed-response (essay/calculation) questions and is administered twice a year, in April and October.

Exam sponsor: Casualty Actuarial Society (CAS). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Questions

100 questions

Time Limit

4 hours

Passing Score

Scaled (CAS does not publish a fixed cut score)

Exam / Certification Fees

~$1,200

Exam sponsor website

Reported exam pass rate: ~40%. historical average across recent sittings This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Basic Ratemaking Methodology

Pure premium method, loss ratio method, fundamental insurance equation, exposure base selection, and overall rate level indications.

20%

Loss Development & Trend

Chain ladder, Bornhuetter-Ferguson, Cape Cod, frequency-severity methods, tail factors, and trend selection (medical CPI, used car CPI, leveraged trend).

10%

Premium Adjustments

On-level premium via parallelogram and extension of exposures, earned vs written premium, premium trend, and exposure base changes.

15%

Loss Adjustments

Loss development, severity and frequency trend, large loss treatment, increased limits factors, deductibles, and loss elimination ratios.

10%

Expense Provisions & Profit Loading

Fixed vs variable expenses, ALAE/ULAE projection, target combined ratio, target ROE, and present value of losses with investment income.

10%

Credibility in Ratemaking

Classical (limited fluctuation) full and partial credibility, Buhlmann credibility, and selection of complement of credibility.

15%

Estimating Claim Liabilities (Reserving)

Case reserves, bulk reserves, pure IBNR vs IBNER, paid vs incurred development, accident year vs report year, salvage and subrogation, Schedule P.

Preparing for the CAS Exam 5 Exam

What You Need to Know

Passing score: Scaled (CAS does not publish a fixed cut score)
Exam length: 100 questions
Time limit: 4 hours
Exam / certification fees: ~$1,200 Official sources

Using Our Practice Resources

Work through all 100 available questions
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CAS Exam 5: Suggested Study Strategy

1Master the Werner-Modlin chapters on the loss ratio and pure premium methods first — they form the conceptual backbone for the entire syllabus

2Build a one-page formula sheet for chain ladder, BF, Cape Cod, and frequency-severity, and rewrite it from memory weekly

3Practice parallelogram on-leveling under multiple rate change patterns until you can compute the area weights without notes

4Work every past CAS Exam 5 question from the last 5 sittings — constructed-response items repeat themes and the graders reward clear methodology justification

5Memorize the classical credibility formulas (N = (z/k)^2; Z = sqrt(N/N_full)) and the Buhlmann formula (Z = N/(N+K)), and know when each applies

Frequently Asked Questions

What does CAS Exam 5 cover?

CAS Exam 5 (Basic Ratemaking and Estimating Claim Liabilities) covers property-casualty ratemaking and reserving. The seven content areas are basic ratemaking methodology (20%), loss development and trend (20%), premium adjustments (10%), loss adjustments (15%), expense and profit (10%), credibility (10%), and reserving (15%). Candidates must master both conceptual and computational material, including pure premium vs loss ratio methods, parallelogram on-leveling, chain ladder, Bornhuetter-Ferguson, Cape Cod, classical and Buhlmann credibility, and IBNR/IBNER estimation.

What is the CAS Exam 5 pass rate?

Recent CAS Exam 5 pass rates have averaged around 40%, ranging roughly from the high 30s to low 40s. CAS publishes detailed sitting-by-sitting results on its website. The exam is graded on a scaled basis, and CAS does not publish a fixed cut score. Pass rates fluctuate with exam difficulty and the candidate pool, but Exam 5 is consistently considered one of the more challenging upper-level CAS exams.

What is the CAS Exam 5 format and length?

CAS Exam 5 is a 4-hour computer-based exam that mixes multiple-choice questions with constructed-response (essay and calculation) problems. The constructed-response items require candidates to show calculations, justify methodology selections, and discuss the appropriateness of assumptions. The exam is administered through Pearson VUE-style CBT centers (CAS uses Prometric for upper-level exams). Total exam time is 4 hours, with no scheduled breaks during the testing window.

When is CAS Exam 5 offered in 2026?

Per the 2026 CAS exam calendar, Exam 5 is offered twice: Spring sitting from April 14 to April 21, 2026, and Fall sitting from October 19 to October 27, 2026. Candidates select an appointment within the sitting window when they register. Registration deadlines fall roughly 2 months before each sitting; check the CAS website for the exact early and final registration cutoffs and any associated late fees.

How much does CAS Exam 5 cost?

CAS Exam 5 costs approximately $1,200 USD for the standard exam fee. CAS also charges a separate annual student fee for active candidates (around $50). Additional costs include study materials (textbooks, online courses, and practice problem sets) which can range from $300 to $1,500+ depending on the provider. Candidates outside North America may also incur additional administrative or testing center fees.

How long should I study for CAS Exam 5?

Most candidates study 350-500 hours for CAS Exam 5, typically over 4-6 months. The volume of material (Friedland's Estimating Unpaid Claims, Werner-Modlin Basic Ratemaking, and supporting CAS readings) is substantial, and the constructed-response format requires extensive practice on past exams. Successful candidates work through 5+ years of past exam questions multiple times and complete a full set of problems for each major method (chain ladder, BF, Cape Cod, credibility, on-leveling).

Free Practice Questions for CAS Exam 5

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