CAS Exam 5 Fall 2015, Question 20
Study guide: Exam 5
An actuary for a large general liability insurer uses a frequency-severity technique to determine the estimate of unpaid claims.
Part a (0.5 points)
Discuss whether the frequency-severity technique is appropriate for determining an estimate of unpaid claims for general liability.
Part b (1.25 points)
The insurer recently changed their offering from large deductible policies to small deductible policies. Discuss the impact of this change on the frequency-severity technique, including an assessment of the appropriateness of the technique.
Part c (0.5 points)
Recommend and justify an improvement to the actuary's estimation of unpaid claims given the change in deductible offerings described in part b. above.
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