CAS Exam 5 Spring 2014, Question 12
Study guide: Exam 5
An insurance company has the following information available for the four different geographic regions within the same line of business:
Earned Exposures by Accident Year
| Region | 2011 | 2012 | 2013 |
|---|---|---|---|
| 1 | 21,900 | 22,560 | 22,125 |
| 2 | 2,575 | 2,460 | 2,520 |
| 3 | 18,000 | 17,460 | 17,800 |
| 4 | 4,450 | 10,720 | 27,500 |
Ultimate Claim Counts by Accident Year
| Region | 2011 | 2012 | 2013 |
|---|---|---|---|
| 1 | 2,075 | 2,143 | 2,010 |
| 2 | 126 | 124 | 125 |
| 3 | 880 | 895 | 877 |
| 4 | 227 | 580 | 1,330 |
Observed Average Age to Age Paid Claim Development Factors (Age in Months)
| Region | 12-24 | 24-36 | 36-48 | 48-60 | 60-Ult |
|---|---|---|---|---|---|
| 1 | 7.67 | 3.07 | 1.75 | 1.30 | 1.10 |
| 2 | 3.20 | 1.70 | 1.28 | 1.10 | 1.06 |
| 3 | 3.19 | 1.73 | 1.31 | 1.12 | 1.04 |
| 4 | 4.10 | 2.28 | 1.52 | 1.05 | 1.03 |
Justify an appropriate grouping of the regional data for estimating the insurer's unpaid claims for the total book of business.
Part a (1 point)
Answer this question and see the worked solution