CAS Exam 5 Spring 2018, Question 22
Study guide: Exam 5
Given the following information as of December 31, 2017:
Cumulative Reported Claims Gross of Reinsurance ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 200 | 400 | 600 | 720 |
| 2015 | 240 | 480 | 720 | |
| 2016 | 300 | 600 | ||
| 2017 | 350 |
| 1.10 | 48-ultimate reported claim development factor |
| 20% | Percentage ceded by the company under a quota share treaty for each accident year |
| Accident Year | Stop Loss Attachment Point ($000) |
|---|---|
| 2014 | 700 |
| 2015 | 750 |
| 2016 | 900 |
| 2017 | 1,000 |
- The aggregate stop loss treaty is applied after the quota share for each year.
- The stop loss treaty covers all losses above the attachment point.
Part a (1.25 points)
Estimate the ultimate claims net of all reinsurance for accident years 2014 through 2017 using the development technique.
Part b (0.75 points)
Calculate the ceded IBNR for accident year 2017.
Part c (0.5 points)
Briefly describe the relationship between gross and net tail factors for each of the following reinsurance arrangements:
- i. Stop Loss
- ii. Quota Share
Answer this question and see the worked solution