CAS Exam 5 Fall 2013, Question 23
Study guide: Exam 5
The following table summarizes the results of various ultimate claim projection techniques as of December 31, 2012 in total for all accident years:
| Technique | Ultimate Claims |
|---|---|
| Reported Development | $10,000 |
| Paid Development | $8,000 |
| Expected Loss | $8,300 |
| Reported Bornhuetter-Ferguson | $9,500 |
| Paid Bornhuetter-Ferguson | $8,100 |
| Reported Berquist-Sherman | $8,350 |
| Paid Berquist-Sherman | $8,150 |
Part a (0.5 points)
Describe a potential operational change that explains the results above.
Part b (0.75 points)
Identify three questions that the reserving actuary should ask the claims department to better understand the impact of the operational change identified in part a above on the unpaid claims estimate.
Part c (0.75 points)
Briefly define three diagnostic tools that can be used to test the reasonability of ultimate claim selections.
Answer this question and see the worked solution