CAS Exam 5 Spring 2018, Question 25
Study guide: Exam 5
Given the following information as of December 31, 2017:
Cumulative Paid ALAE ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 320 | 1,920 | 3,840 | 4,224 |
| 2015 | 280 | 1,680 | 3,360 | |
| 2016 | 330 | 1,980 | ||
| 2017 | 340 |
Cumulative Paid Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 8,000 | 24,000 | 38,400 | 42,240 |
| 2015 | 7,000 | 21,000 | 33,600 | |
| 2016 | 8,250 | 24,750 | ||
| 2017 | 4,250 |
Ratio of Paid ALAE-to-Paid Claims as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2014 | 0.04 | 0.08 | 0.10 | 0.10 |
| 2015 | 0.04 | 0.08 | 0.10 | |
| 2016 | 0.04 | 0.08 | ||
| 2017 | 0.08 |
| Accident Year | Reported Claim Development Technique Ultimate Claims ($000) | Selected Ultimate Claims ($000) | Selected Ultimate Claim Count |
|---|---|---|---|
| 2014 | 42,240 | 42,240 | 3,600 |
| 2015 | 36,960 | 36,960 | 3,000 |
| 2016 | 43,560 | 43,560 | 3,400 |
| 2017 | 35,000 | 66,440 | 3,500 |
- There is no development beyond 48 months.
Part a (0.75 points)
Estimate ultimate ALAE for accident year 2017 using the paid ALAE development technique.
Part b (1 point)
Estimate ultimate ALAE for all accident years using the paid ALAE-to-paid claims only development technique with additive factors.
Part c (0.5 points)
Recommend and briefly justify an estimate of ultimate ALAE for accident year 2017 from the results of parts a. and b. above.
Answer this question and see the worked solution