Final Answer:
The Net Aggregate Loss Factor, equivalent to the Net Insurance Charge (CxIx(ELR)), can be negative, provided the basic premium factor remains positive.
Step-by-step explanation:
Net Aggregate Loss Factor and Net Insurance Charge Equation: The given equation, Net Aggregate Loss Factor = Net Insurance Charge = CxIx(ELR), defines the relationship between the net aggregate loss factor and the net insurance charge. Both are calculated using the product of the exposure (Cx), insurance units (Ix), and the experience loss ratio (ELR).
Permissibility of Negative Net Aggregate Loss Factor: The statement asserts that the Net Aggregate Loss Factor may be less than zero, indicating a potential surplus in the calculation. However, this is contingent upon the basic premium factor not being negative.
Dependency on Basic Premium Factor: The basic premium factor plays a crucial role in determining the permissibility of a negative Net Aggregate Loss Factor. If the basic premium factor remains positive, it allows for the Net Aggregate Loss Factor to go below zero.