CAS Exam 5 Spring 2013, Question 19
Study guide: Exam 5
Given the following information:
| Accident Year | Claim Counts (reported as of 12/31/2012) | Severities (reported as of 12/31/2012) | Payroll ($000) |
|---|---|---|---|
| 2010 | 1,549 | $22,418 | $63,438 |
| 2011 | 1,455 | $18,730 | $62,893 |
| 2012 | 1,023 | $12,501 | $67,005 |
| As of Month | Claim Count (Reported %) | Severities (Reported %) |
|---|---|---|
| 12 | 85.0% | 43.0% |
| 24 | 95.0% | 67.0% |
| 36 | 98.0% | 83.0% |
- The reported claim counts for accident year 2012 are unusually low due to a temporary slowdown of claims being opened.
- Annual frequency trend = -2%.
- Annual severity trend = +5%.
- Annual payroll trend = +4%.
Use an appropriate frequency-severity technique to estimate the IBNR for accident year 2012 at December 31, 2012 and justify all selections.
Part a (3.25 points)
Answer this question and see the worked solution