CAS Exam 5 Fall 2015, Question 18
Study guide: Exam 5
Given the following data:
| Calendar / Accident Year | Earned Premium ($000s) |
|---|---|
| 2011 | 100 |
| 2012 | 150 |
| 2013 | 150 |
| 2014 | 200 |
Reported Claims ($000s):
| Calendar / Accident Year | 12 Months | 24 Months | 36 Months | 48 Months |
|---|---|---|---|---|
| 2011 | 26 | 40 | 48 | 51 |
| 2012 | 40 | 43 | 51 | |
| 2013 | 44 | 67 | ||
| 2014 | 69 |
- The a priori expected claim ratio for all accident years is 51%.
- There is no development after 48 months.
Part a (1 point)
Calculate ultimate claims for accident year 2014 using the reported Bornhuetter-Ferguson technique. Justify all selections.
Part b (0.5 points)
Discuss the applicability of the Bornhuetter-Ferguson technique when cumulative claim development factors are less than 1.00.
Answer this question and see the worked solution
Concepts tested
- Bornhuetter-Ferguson Method
- Development Factor
- Loss Development
- Accident Year
- Age to Age Factor
- Cumulative Development Factor