CAS Exam 5 Fall 2015, Question 22

Study guide: Exam 5

An actuary is using the development technique based on accident year data to calculate ultimate claim estimates at 12 months maturity.

For each issue provided below, briefly discuss how it may impact the analysis and propose an appropriate response to mitigate the issue.

Part a (0.5 points)

The actuary observes a long development pattern.

Part b (0.5 points)

Tort reforms anticipated to decrease severity on all open and future claims were recently enacted.

Part c (0.5 points)

In recent years, policies have been written with higher deductibles than in prior years.

Part d (0.5 points)

The insurer has implemented a new claims system that allows faster processing of claims.

Answer this question and see the worked solution

Concepts tested

• Loss Development
• Deductible
• Mix of Business
• Accident Year
• Policy Year
• Changing Conditions
• Chain Ladder Method

More questions from this set

• CAS Exam 5 Fall 2015, Question 21
• CAS Exam 5 Fall 2015, Question 23