CAS Exam 5 Fall 2015, Question 24

Study guide: Exam 5

Given the following data as of December 31, 2014:

Paid Claims Only ($000) as of (months):

Paid ALAE ($000) as of (months):

• Assume that no development occurs after 48 months.

Part a (1.5 points)

Calculate ultimate ALAE using the multiplicative development technique applied to the ratio of paid ALAE-to-paid claims only for accident years 2012, 2013, and 2014.

Part b (1.25 points)

Calculate ultimate ALAE using the additive alternative approach to the technique in part a. above for accident years 2012, 2013, and 2014.

Part c (0.5 points)

Select and justify a reasonable estimate of ultimate ALAE for accident year 2014 based on the estimates calculated in parts a. and b. above.

Answer this question and see the worked solution

Concepts tested

• Allocated Loss Adjustment Expense
• Accident Year
• Settlement Rate

More questions from this set

• CAS Exam 5 Fall 2015, Question 23
• CAS Exam 5 Fall 2015, Question 25