CAS Exam 5 Fall 2018, Question 18
Study guide: Exam 5
Given the following data as of December 31, 2017:
Cumulative Reported Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 500 | 1,100 | 1,800 | 2,500 |
| 2015 | 900 | 1,700 | 2,300 | |
| 2016 | 1,000 | 1,900 | ||
| 2017 | 1,100 |
| Calendar Year | Earned Premium ($000) |
|---|---|
| 2014 | 5,300 |
| 2015 | 7,200 |
| 2016 | 7,800 |
| 2017 | 8,500 |
| 1.3 | 48 to ultimate reported claim development factor |
- In 2015 the company started writing a new class of insureds within this line of business.
- Both existing and new classes of insureds are priced accurately.
Part a (1.25 points)
Estimate ultimate claims for accident year 2017 using the reported Cape Cod technique.
Part b (0.5 points)
Discuss the effect the new class of insureds has on the reported Cape Cod technique for accident year 2017.
Answer this question and see the worked solution