CAS Exam 5 Fall 2017, Question 17
Study guide: Exam 5
The following information is available for a private passenger automobile insurer:
- The insurer started writing business five years ago.
- External data from other private passenger automobile insurers is used to supplement the insurer's data in estimation of unpaid claims.
- Unpaid claims have been estimated historically on a combined bodily injury and property damage basis.
- Internal data shows that the bodily injury claims take longer to reach ultimate than the property damage claims.
Internal management has asked the reserving actuary to begin estimating reserves separately for bodily injury and property damage claims using only internal data.
Part a (0.75 points)
Fully discuss an argument to support this proposed change.
Part b (0.75 points)
Fully discuss an argument against this proposed change.
Answer this question and see the worked solution
Concepts tested
- Reserving Data Organization
- Homogeneity
- Credibility
- External Information in Reserving
- Data Segmentation