CAS Exam 5 Fall 2014, Question 15
Study guide: Exam 5
Given the following data as of December 31, 2013:
| Accident Year | Reported Claims ($000) | Reported Development Factor to Ultimate | On-Level Earned Premium ($000) |
|---|---|---|---|
| 2011 | 20,900 | 1.600 | 38,000 |
| 2012 | 21,000 | 2.100 | 50,000 |
| 2013 | 11,500 | 3.700 | 67,000 |
- Annual loss trend = 7%.
- There has been a law change effective July 1, 2012, applicable to all claims occurring after the effective date.
- Estimated reduction to ultimate claims based on law change = 20%.
Estimate IBNR for accident year 2013 using the expected claims technique.
Part a (2 points)
Answer this question and see the worked solution
Concepts tested
- Expected Loss Method
- Bornhuetter-Ferguson Method
- Earned Premium
- Accident Year
- Policy Provision Changes