CAS Exam 5 Spring 2015, Question 17
Study guide: Exam 5
Given the following information for an insurance company:
| Calendar/Accident Year | Earned Car Years | Earned Premium ($000) | Reported Claims ($000) | Selected CDF |
|---|---|---|---|---|
| 2011 | 830 | 415 | 315 | 1.05 |
| 2012 | 1,000 | 450 | 392 | 1.10 |
| 2013 | 1,000 | 475 | 358 | 1.30 |
| 2014 | 700 | 280 | 200 | 2.00 |
- The company first started writing business in 2011.
- The mix of business has not changed.
- Significant rate changes have occurred over the past four years.
- Policies are annual and are written uniformly throughout the year.
Calculate the IBNR for accident year 2014 using the Cape Cod technique, incorporating adjustments for claims trend and on-leveling of premium. Justify the selection of claims trend.
Part a (2.75 points)
Answer this question and see the worked solution