CAS Exam 5 Spring 2015, Question 20

Study guide: Exam 5

Given the following data as of December 31, 2014:

Calendar/Accident Year 2014 Information:


Exposure Units	36,000,000
Paid Claims	$8,700,000
Reported Claims	$20,300,000
Selected Ultimate Trended Frequency per 100 Exposure Units	0.42
Selected 12-Ultimate Reported Claims Development Factor	1.720
Selected 12-Ultimate Paid Claims Development Factor	2.960
Selected 12-Ultimate Reported Claim Count Development Factor	1.200
Expected Loss Ratio	44.5%
Rate per 1,000 Exposure Units	1.560

Additional Information:


Accident Year 2012 Selected Ultimate Severity	$160
Severity Trend	5.0%

Reported Claims as of (months) in $000:

Accident Year	12	24	36	48	60
2010	14,200	18,839	22,362	24,039	24,424
2011	14,100	18,707	22,205	23,870
2012	15,300	20,299	24,094
2013	14,700	19,503
2014	20,300

Paid Claims as of (months) in $000:

Accident Year	12	24	36	48	60
2010	8,200	14,722	21,081	23,316	24,272
2011	8,300	14,901	21,339	23,600
2012	8,900	15,978	22,881
2013	8,400	15,081
2014	8,700

Part a (1.5 points)

For accident year 2014, calculate the ultimate claims estimate under each of the following techniques:

i. Frequency-Severity Technique ii. Reported Claims Development Technique iii. Paid Claims Development Technique iv. Reported Bornhuetter-Ferguson Technique

Part b (1 point)

For each of the techniques listed in part a. above, briefly discuss whether the technique is appropriate to select the ultimate claims estimate for accident year 2014.

Answer this question and see the worked solution

CAS Exam 5 Spring 2015, Question 20

Part a (1.5 points)

Part b (1 point)

Concepts tested

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