CAS Exam 5 Spring 2016, Question 25
Study guide: Exam 5
Given the following estimates of ultimate claims ($000):
| Accident Year | Development Techniques: Paid | Development Techniques: Reported | Development Techniques: Case Outstanding | Bornhuetter-Ferguson Techniques: Paid | Bornhuetter-Ferguson Techniques: Reported |
|---|---|---|---|---|---|
| 2013 | 2,200 | 2,100 | 2,250 | 2,050 | 2,300 |
| 2014 | 3,300 | 3,400 | 2,700 | 2,500 | 2,400 |
| 2015 | 2,300 | 3,100 | 3,150 | 2,400 | 3,000 |
Part a (1 point)
Identify one potential scenario that explains the differences between estimates resulting from the techniques above for accident year 2014. Select and briefly justify an ultimate claims estimate for accident year 2014 given this scenario.
Part b (1 point)
Identify one potential scenario that explains the differences between estimates resulting from the techniques above for accident year 2015. Select and briefly justify an ultimate claims estimate for accident year 2015 given this scenario.
Answer this question and see the worked solution
Concepts tested
- Loss Development
- Reserve Adequacy
- Accident Year
- Settlement Rate
- Changing Conditions
- Bornhuetter-Ferguson Method
- Chain Ladder Method