CAS Exam 5 Spring 2013, Question 23
Study guide: Exam 5
Given the following information:
Unadjusted Case Outstanding Claims ($000s)
| Accident Year | 12 Months | 24 Months | 36 Months |
|---|---|---|---|
| 2010 | $10,300 | $21,300 | $37,500 |
| 2011 | $11,400 | $29,400 | |
| 2012 | $15,600 |
Open Claim Counts
| Accident Year | 12 Months | 24 Months | 36 Months |
|---|---|---|---|
| 2010 | 1,030 | 1,420 | 1,500 |
| 2011 | 1,140 | 1,470 | |
| 2012 | 1,200 |
Unadjusted Cumulative Paid Claims ($000s)
| Accident Year | 12 Months | 24 Months | 36 Months |
|---|---|---|---|
| 2010 | $2,575 | $15,975 | $30,000 |
| 2011 | $2,850 | $18,200 | |
| 2012 | $3,900 |
Selected annual severity trend = +5%
Part a (1.5 points)
Calculate the adjusted cumulative reported claim triangle using the Berquist-Sherman case outstanding adjustment technique.
Part b (0.5 points)
Discuss whether IBNR estimated using the Berquist-Sherman case outstanding adjustment technique should be higher or lower than IBNR estimated using an unadjusted reported claim development technique.
Answer this question and see the worked solution