Actuarial Notes

CAS Exam 5 Spring 2015, Question 22

Study guide: Exam 5

Given the following information:

Cumulative Reported Claims ($000s) as of (months):

Accident Year 12 24 36
2012 10,000 15,000 16,500
2013 11,280 17,900
2014 13,500

Cumulative Reported Claim Counts as of (months):

Accident Year 12 24 36
2012 1,500 1,650 1,700
2013 1,650 1,815
2014 1,815

Cumulative Paid Claims ($000s) as of (months):

Accident Year 12 24 36
2012 5,000 12,000 15,600
2013 5,775 13,860
2014 6,680

Cumulative Closed Claim Counts as of (months):

Accident Year 12 24 36
2012 850 1,445 1,615
2013 935 1,590
2014 1,030

Case Outstanding ($000s) as of (months):

Accident Year 12 24 36
2012 5,000 3,000 900
2013 5,505 4,040
2014 6,820

Open Claim Counts as of (months):

Accident Year 12 24 36
2012 650 205 85
2013 715 225
2014 785
  • There are no partial payments.
  • Assume no reported development after 36 months.
  • Assume an annual severity trend of 5%.

Part a (0.75 points)

Assess the appropriateness of using the reported development technique for calculating ultimate claims given the data above.

Part b (1.5 points)

Estimate ultimate claims for accident year 2014 using a Berquist-Sherman case outstanding adjustment.

Part c (0.25 points)

Briefly explain how the Berquist-Sherman case outstanding adjustment can be considered in the reported Bornhuetter-Ferguson technique.

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