CAS Exam 5 Spring 2018, Question 21
Study guide: Exam 5
Given the following information:
Cumulative Paid Loss + ALAE ($) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 150,000 | 450,000 | 550,000 | 620,000 |
| 2014 | 170,000 | 480,000 | 560,000 | 590,000 |
| 2015 | 160,000 | 470,000 | 510,000 | |
| 2016 | 180,000 | 270,000 | ||
| 2017 | 90,000 |
Average Case Outstanding ($) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 300 | 320 | 290 | 310 |
| 2014 | 320 | 310 | 350 | 200 |
| 2015 | 310 | 400 | 250 | |
| 2016 | 450 | 190 | ||
| 2017 | 120 |
Open Claim Counts as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 193.6 | 210.4 | 142 | 44 |
| 2014 | 238 | 225 | 145 | 110 |
| 2015 | 222.7 | 207.3 | 192 | |
| 2016 | 259.6 | 263.7 | ||
| 2017 | 810 |
Cumulative Closed Claim Counts as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 1,006.4 | 1,139.6 | 1,258 | 1,406 |
| 2014 | 1,020 | 1,155 | 1,275 | 1,350 |
| 2015 | 1,026.8 | 1,162.7 | 1,208 | |
| 2016 | 1,040.4 | 1,086.3 | ||
| 2017 | 540 |
Cumulative Reported Claim Counts as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 1,200 | 1,350 | 1,400 | 1,450 |
| 2014 | 1,258 | 1,380 | 1,420 | 1,460 |
| 2015 | 1,249.5 | 1,370 | 1,400 | |
| 2016 | 1,300 | 1,350 | ||
| 2017 | 1,350 |
| Accident Year | Ultimate Claim Counts |
|---|---|
| 2013 | 1,480 |
| 2014 | 1,500 |
| 2015 | 1,510 |
| 2016 | 1,530 |
| 2017 | 1,600 |
Berquist-Sherman Adjusted Cumulative Paid Claims ($)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 150,000 | 450,000 | 550,000 | 620,000 |
| 2014 | 170,000 | 480,000 | 560,000 | 623,644 |
| 2015 | 160,000 | 470,000 | 557,892 | |
| 2016 | 180,000 | 577,919 | ||
| 2017 | 162,049 |
| 12% | Annual severity trend |
| 1.2 | Adjusted paid 48-Ultimate development factor |
- In 2016, the company undertook an effort to significantly increase the strength of their case reserves.
- In 2017, the company experienced significant turnover in their claims department resulting in extreme distortions to case reserve and payment patterns.
- As of the end of 2017 the staffing levels have returned to normal.
Calculate an appropriate estimate of the ultimate loss & ALAE for accident year 2017 using Berquist-Sherman adjustments with the calendar year 2016 diagonal as the basis for adjusting.
Part a (2.5 points)
Answer this question and see the worked solution