CAS Exam 5 Fall 2018, Question 20
Study guide: Exam 5
Given the following data as of December 31, 2017:
Case Outstanding ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 50,400 | 51,150 | 35,100 | 9,600 |
| 2015 | 45,900 | 64,500 | 36,000 | |
| 2016 | 60,300 | 68,400 | ||
| 2017 | 62,100 |
Cumulative Paid Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 10,800 | 21,600 | 129,600 | 276,000 |
| 2015 | 9,800 | 19,000 | 125,000 | |
| 2016 | 10,350 | 20,000 | ||
| 2017 | 10,500 |
Open Claim Counts as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 360 | 465 | 270 | 80 |
| 2015 | 340 | 430 | 250 | |
| 2016 | 335 | 450 | ||
| 2017 | 345 |
| 7.5% | Selected annual severity trend |
| 1.05 | 48 to ultimate reported claim development factor |
Part a (0.5 points)
Evaluate whether there has been a change in the adequacy of case outstanding over the experience period.
Part b (1.25 points)
Estimate the ultimate claims for accident year 2017 using the Berquist-Sherman adjustment.
Part c (0.25 points)
Briefly explain the effect of the Berquist-Sherman adjustment in part b. above when compared to the result using unadjusted data.
Part d (0.25 points)
Briefly describe a potential limitation to the Berquist-Sherman adjustment in part b. above.
Answer this question and see the worked solution