CAS Exam 5 Spring 2016, Question 4
Study guide: Exam 5
Given the following information:
| Claim | Policy Effective Date | Accident Date | Report Date | Transaction Date | Claim Status | Loss Payment | Case Reserve Change |
|---|---|---|---|---|---|---|---|
| 1 | October 1, 2013 | December 15, 2013 | January 5, 2014 | January 7, 2014 | Open | - | +$5,000 |
| 1 | October 1, 2013 | December 15, 2013 | January 5, 2014 | March 1, 2014 | Open | $4,000 | -$4,000 |
| 1 | October 1, 2013 | December 15, 2013 | January 5, 2014 | January 5, 2015 | Closed | $500 | -$1,000 |
| 2 | November 1, 2013 | February 1, 2014 | February 10, 2014 | March 1, 2014 | Open | - | +$6,000 |
| 2 | November 1, 2013 | February 1, 2014 | February 10, 2014 | March 15, 2014 | Closed | $6,000 | -$6,000 |
| 3 | January 1, 2014 | June 1, 2014 | June 5, 2014 | June 10, 2014 | Open | - | +$10,000 |
| 3 | January 1, 2014 | June 1, 2014 | June 5, 2014 | September 1, 2014 | Open | $1,000 | +$10,000 |
| 3 | January 1, 2014 | June 1, 2014 | June 5, 2014 | January 3, 2015 | Open | $4,000 | -$5,000 |
| 4 | June 1, 2014 | August 15, 2014 | July 15, 2015 | July 20, 2015 | Open | $500 | +$5,000 |
| 4 | June 1, 2014 | August 15, 2014 | July 15, 2015 | March 1, 2016 | Open | - | +$5,000 |
| 4 | June 1, 2014 | August 15, 2014 | July 15, 2015 | June 1, 2016 | Open | $5,000 | +$7,000 |
- Calendar year 2014 earned premium = $50,000.
- Calendar year 2015 earned premium = $60,000.
Part a (0.5 points)
Calculate the 2015 calendar year case incurred losses.
Part b (0.5 points)
Calculate the 2014 policy year case incurred losses, evaluated at December 31, 2014.
Part c (0.75 points)
Calculate the 2014 accident year case incurred loss ratio, evaluated at December 31, 2015.
Part d (0.5 points)
Provide one advantage and one disadvantage of using policy year data in ratemaking analyses.
Answer this question and see the worked solution