CAS Exam 5 Spring 2013, Question 18

Study guide: Exam 5

Part a (0.25 points)

Briefly explain the key assumption of the Bornhuetter-Ferguson method.

Part b (0.5 points)

Briefly explain how the Bornhuetter-Ferguson method can be considered a credibility-weighted method and how the credibility is calculated.

Part c (0.25 points)

Briefly describe one situation where the credibility-weighted assumption underlying the Bornhuetter-Ferguson method may not apply.

Part d (0.5 points)

Explain whether the paid or reported Bornhuetter-Ferguson method is more responsive in a situation where claim ratios are increasing.

Part e (0.5 points)

Compare and contrast the Cape Cod method and the Bornhuetter-Ferguson method by providing one similarity and one difference.

Answer this question and see the worked solution

Concepts tested

• Bornhuetter-Ferguson Method
• Loss Development
• Cape Cod Method
• Credibility

More questions from this set

• CAS Exam 5 Spring 2013, Question 17
• CAS Exam 5 Spring 2013, Question 19