CAS Exam 5 Spring 2017, Question 21
Study guide: Exam 5
Given the following information:
Ultimate Claim Estimates ($000)
| Accident Year | As of 12/31/2015 — Paid Claim Development Technique | As of 12/31/2015 — Reported Claim Development Technique | As of 12/31/2016 — Paid Claim Development Technique | As of 12/31/2016 — Reported Claim Development Technique |
|---|---|---|---|---|
| 2013 | 109 | 107 | 108 | 110 |
| 2014 | 107 | 108 | 105 | 117 |
| 2015 | 107 | 108 | 102 | 122 |
| 2016 | --- | --- | 100 | 150 |
- The actuary selects age-to-age factors for each development technique using a five-year volume-weighted average.
Part a (0.5 points)
Describe one scenario that could explain the change in estimates from the December 31, 2015 evaluation to the December 31, 2016 evaluation for accident years 2015 and prior.
Part b (0.5 points)
Describe one scenario impacting only accident year 2016 that could explain the difference between the two development techniques.
Part c (0.25 points)
Briefly describe an adjustment or an alternate technique for estimating ultimate claims that is appropriate for the scenario identified in part a. above.
Part d (0.25 points)
Briefly describe an adjustment or an alternate technique for estimating ultimate claims that is appropriate for the scenario identified in part b. above.
Answer this question and see the worked solution