CAS Exam 5 Fall 2017, Question 26
Study guide: Exam 5
Given the following information:
| Accident Year | Cumulative Paid Claims ($000) as of 12 months | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 750 | 1,125 | 1,350 | 1,485 |
| 2014 | 2,000 | 3,000 | 3,600 | |
| 2015 | 2,500 | 3,750 | ||
| 2016 | 3,000 |
| Accident Year | Calendar Year Paid ULAE ($000) |
|---|---|
| 2013 | 220 |
| 2014 | 220 |
| 2015 | 330 |
- Case reserves at December 31, 2016 = $3,500,000.
- IBNR reserves at December 31, 2016 = $1,000,000.
- The four-year weighted average ULAE to loss ratio = 10%.
- No business was written prior to 2013.
Part a (0.5 points)
Estimate the unpaid ULAE using the classical technique.
Part b (1 point)
Calculate the paid ULAE to paid claims ratio for calendar year 2016.
Part c (0.5 points)
Assess the reasonableness of the unpaid ULAE estimate from part a. above.
Answer this question and see the worked solution
Concepts tested
- Unallocated Loss Adjustment Expenses ULAE
- Loss and Loss Adjustment Expense
- Case Reserves
- IBNR
- Reasonableness Testing