Actuarial Notes

CAS Exam 5 Spring 2016, Question 24

Study guide: Exam 5

Given the following information:

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

Accident Year 12 24 36 48
2011 450 650 730 750
2012 500 700 780
2013 500 750
2014 700
Accident Year Selected Ultimate Claims ($) Reported Claims ($) as of December 31, 2015
2011 750 750
2012 1,000 950
2013 1,050 900
2014 1,200 950
  • There is no development after 48 months.

Part a (1.5 points)

Compare actual reported claim emergence to expected reported claim emergence in calendar year 2015 for accident years 2011 through 2014.

Part b (1.5 points)

When considering actual emergence compared to expected emergence, the actuary can react in one of three ways:

i. Reduce the recommended unpaid claims ii. Leave the recommended unpaid claims at the same expected level iii. Increase the recommended unpaid claims

Identify and briefly justify a reserving technique that would generate each of the three potential reactions using the results of part a. above.

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Concepts tested

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