CAS Exam 5 Spring 2013, Question 24
Study guide: Exam 5
Given the following information:
Paid Claims Gross of Salvage & Subrogation
| Accident Year | 12 Months | 24 Months | 36 Months | 48 Months |
|---|---|---|---|---|
| 2009 | $2,000 | $2,400 | $2,500 | $2,500 |
| 2010 | $2,100 | $2,300 | $2,400 | |
| 2011 | $2,100 | $2,400 | ||
| 2012 | $2,500 |
Paid Salvage & Subrogation
| Accident Year | 12 Months | 24 Months | 36 Months | 48 Months |
|---|---|---|---|---|
| 2009 | $98 | $166 | $250 | $250 |
| 2010 | $105 | $163 | $240 | |
| 2011 | $107 | $170 | ||
| 2012 | $75 |
- Assume no development after age 48.
- Ultimate claims for accident year 2012 = $2,985.
Part a (0.75 points)
Using a development approach, estimate the ultimate salvage and subrogation for accident year 2012.
Part b (1.5 points)
Using a ratio approach, estimate the ultimate salvage and subrogation for accident year 2012.
Part c (0.25 points)
Briefly discuss which approach, the development or ratio approach, to select in recommending an ultimate salvage and subrogation estimate for accident year 2012.
Answer this question and see the worked solution