CAS Exam 5 Spring 2017, Question 25
Study guide: Exam 5
An insurance company has experienced a large claim in accident year 2016. Given the following information for accident year 2016:
| Estimated Ultimate ALAE Without Adjustment for Large Claim | |
|---|---|
| Paid ALAE Development Technique | Paid ALAE to Paid Claims Only Ratio Technique |
| $11,000 | $12,000 |
| Paid Claims Only | Paid ALAE | Ultimate Claims Only | Ultimate ALAE | |
|---|---|---|---|---|
| All Claims | $7,000 | $2,000 | $30,000 | Not Provided |
| Large Claim | $0 | $1,500 | $6,000 | $2,000 |
Part a (0.75 points)
Estimate ultimate ALAE for accident year 2016 using the paid ALAE development technique, including an adjustment for the large claim.
Part b (0.75 points)
Estimate ultimate ALAE for accident year 2016 using the paid ALAE to paid claims ratio technique, including an adjustment for the large claim.
Answer this question and see the worked solution