CAS Exam 5 Spring 2017, Question 23

Study guide: Exam 5

Given the following data as of December 31, 2016:

The 12 / 24 / 36 / 48 columns are cumulative paid claims as of that many months.

• A court decision on December 31, 2014 led to a 20% increase in severity for all payments occurring after the decision.
• The company took a rate change of +20% effective on January 1, 2014.
• Policies are annual and are written evenly throughout the year.
• There is no development beyond 48 months.

Part a (1.5 points)

Calculate accident year 2016 ultimate claims using the paid claim development technique, incorporating the impact of the court decision.

Part b (1.5 points)

Calculate the accident year 2016 ultimate claims using the Cape Cod technique, incorporating the impact of the court decision.

Answer this question and see the worked solution

Concepts tested

• Cape Cod Method
• Chain Ladder Method
• On Level Premium
• Development Triangle
• Changing Conditions
• Rate Level Change

More questions from this set

• CAS Exam 5 Spring 2017, Question 22
• CAS Exam 5 Spring 2017, Question 24