CAS Exam 5 Fall 2017, Question 22
Study guide: Exam 5
Given the following data as of December 31, 2016:
Industry Cumulative Reported Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 500,000 | 800,000 | 900,000 | 950,000 |
| 2014 | 400,000 | 750,000 | 880,000 | |
| 2015 | 450,000 | 750,000 | ||
| 2016 | 500,000 |
Industry Case Outstanding ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 200,000 | 300,000 | 50,000 | 0 |
| 2014 | 150,000 | 250,000 | 80,000 | |
| 2015 | 170,000 | 300,000 | ||
| 2016 | 230,000 |
Self-Insured Company Case Outstanding ($000) as of December 31, 2016
| Accident Year | Case Outstanding ($000) |
|---|---|
| 2013 | 0 |
| 2014 | 80 |
| 2015 | 250 |
| 2016 | 400 |
- There is no development after 48 months.
- Industry cumulative reported claims development factor at 12 months = 2.100.
Part a (1.5 points)
Calculate an accident year 2016 unpaid claim estimate for the company.
Part b (0.5 points)
Identify two potential limitations of the approach used in part a. above.
Answer this question and see the worked solution