CAS Exam 5 Spring 2014, Question 13
Study guide: Exam 5
An insurance company has reported the following information:
| Accident Year | As of Date | Reported Claims ($000) |
|---|---|---|
| 2011 | December 31, 2011 | 25,000 |
| 2011 | December 31, 2012 | 45,000 |
| 2011 | December 31, 2013 | 56,250 |
| 2012 | December 31, 2012 | 30,000 |
| 2012 | December 31, 2013 | 51,000 |
| 2013 | December 31, 2013 | 21,000 |
Assume there is no development beyond 36 months.
Part a (1.5 points)
Calculate the ultimate claims for accident year 2013 using the reported claim development technique.
Part b (0.5 points)
State two assumptions of the reported claim development technique.
Part c (1 point)
For each assumption identified in part b. above, identify and briefly describe an alternative technique that may be utilized when the assumption does not hold.
Answer this question and see the worked solution
Concepts tested
- Loss Development
- Berquist-Sherman Method
- Expected Loss Method
- Age to Age Factor
- Chain Ladder Method
- Changing Conditions