Actuarial Notes

CAS Exam 5 Fall 2018, Question 24

Study guide: Exam 5

The following information is available for an insurance company:

Age (Month) Cumulative Paid Development Factors to Ultimate Cumulative Reported Development Factors to Ultimate
12 2.44 1.69
15 2.00 1.46
18 1.65 1.38
21 1.49 1.30
24 1.38 1.22

Accident year 2017 as of March 31, 2018:
2,400 Reported claims ($)
1,820 Paid claims ($)
3,300 Selected ultimate claims ($)

Accident year 2017 as of May 31, 2018:
2,750 Reported claims ($)
2,050 Paid claims ($)
  • Loss emergence between evaluation points is linear.

Part a (1.25 points)

Considering the data through March 31, 2018, compare the cumulative expected reported claims to the actual reported claims as of May 31, 2018 for accident year 2017.

Part b (1.25 points)

Considering the data through March 31, 2018, compare the cumulative expected paid claims to the actual paid claims as of May 31, 2018 for accident year 2017.

Part c (0.5 points)

Describe a situation in which the actuary would revise the March 31, 2018 estimate of ultimate claims given the results calculated in parts a. and b. above.

Part d (0.5 points)

Describe a situation in which the actuary would not revise the March 31, 2018 estimate of ultimate claims given the results calculated in parts a. and b. above.

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Concepts tested

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