The cumulative formula method is to accumulate the difference between premium and insurance payment and expenses to a certain point in the future with interest rate.
At the end of any insurance year, the cumulative value of the effective policies with unit coverage is called asset share, so this method also becomes asset share pricing method. With the development of computer technology, the cumulative formula method has been widely used in practice.
The accumulation formula method can be realized by trial and error. First, choose a trial premium to calculate and observe its result. If the result is far from the company's profit target, the new premium will be replaced and recalculated, thus making the new premium assumption closer to the company's profit target.
In many cases, we can calculate the impact of premium changes on profits, so that after calculating a trial premium, we can directly contact the final premium that can reach the expected profit index.