CAS Exam 5 Spring 2014, Question 22
Study guide: Exam 5
The following information is available for an insurance company:
| Month | Paid Development Factors to Ultimate | Reported Development Factors to Ultimate |
|---|---|---|
| 12-Ult | 2.22 | 1.54 |
| 15-Ult | 1.82 | 1.33 |
| 18-Ult | 1.50 | 1.25 |
| 21-Ult | 1.35 | 1.18 |
| 24-Ult | 1.25 | 1.11 |
Accident year 2013 as of March 31, 2014:
- Reported claims: $2,200
- Paid claims: $1,650
- Selected ultimate claims: $3,000
Accident year 2013 as of May 31, 2014:
- Reported claims: $2,500
- Paid claims: $1,875
Part a (1.25 points)
Considering the data through March 31, 2014, compare the cumulative expected reported claims to the actual reported claims as of May 31, 2014 for accident year 2013.
Part b (1.25 points)
Considering the data through March 31, 2014, compare the cumulative expected paid claims to the actual paid claims as of May 31, 2014 for accident year 2013.
Part c (0.5 points)
Given the results calculated in parts a. and b. above, describe a situation in which the actuary would revise the March 31, 2014 estimate of ultimate claims.
Part d (0.5 points)
Given the results calculated in parts a. and b. above, describe a situation in which the actuary would not revise the March 31, 2014 estimate of ultimate claims.
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