CAS Exam 5 Spring 2013, Question 21
Study guide: Exam 5
Given the following information as of the December 31, 2011 actuarial valuation:
| Accident Year | Ultimate Claims | Reported Claims | Paid Claims |
|---|---|---|---|
| 2010 | $1,200 | $280 | $125 |
| 2011 | $1,300 | $125 | $75 |
| Total | $2,500 | $405 | $200 |
| Age in Months | Cumulative % Reported | Cumulative % Paid |
|---|---|---|
| 36 | 40% | 12% |
| 24 | 25% | 10% |
| 12 | 10% | 5% |
Given the following information as of December 31, 2012:
| Accident Year | Reported Claims | Paid Claims |
|---|---|---|
| 2010 | $470 | $200 |
| 2011 | $320 | $175 |
| Total | $790 | $375 |
Part a (0.5 points)
Based on the 2011 actuarial valuation, calculate expected paid claims for each accident year during calendar year 2012.
Part b (0.5 points)
Based on the 2011 actuarial valuation, calculate expected reported claims for each accident year during calendar year 2012.
Part c (0.5 points)
Discuss a scenario that explains any differences between actual and expected paid and reported claims as of December 31, 2012.
Part d (0.5 points)
Using the scenario discussed in part c above, justify the selection of a reserving technique for estimating ultimate claims as of December 31, 2012.
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