CAS Exam 5 Fall 2017, Question 27

Study guide: Exam 5

Given the following information for an insurer as of December 31, 2016:

Company management strengthened outstanding case reserves on all open claims during 2016.
Four unusually large claims that occurred in 2015 have been paid and closed. There are no other large losses in the company's history.
No adjustments were made to historical claim development factors.

Briefly assess the appropriateness of each reserving technique provided for each accident year below.

Part a (0.5 points)

Accident year 2013:

i. Paid development technique. ii. Reported development technique.

Accident year 2014:

i. Disposal rate frequency-severity technique. ii. Reported Bornhuetter-Ferguson technique.

Accident year 2015:

i. Paid development technique. ii. Paid Bornhuetter-Ferguson technique.