CAS Exam 5 Spring 2019, Question 16
Study guide: Exam 5
Given the following data for an insurance company evaluated as of December 31, 2018:
| Accident Year | Cumulative Reported Claims ($000s) at 12 | Cumulative Reported Claims ($000s) at 24 | Cumulative Reported Claims ($000s) at 36 | Cumulative Reported Claims ($000s) at 48 |
|---|---|---|---|---|
| 2015 | 900 | 2,150 | 3,125 | 3,900 |
| 2016 | 800 | 2,075 | 3,225 | |
| 2017 | 850 | 2,125 | ||
| 2018 | 950 |
| 1.100 | 48 to ultimate reported claim development factor |
|---|
Part a (0.75 points)
Calculate the company's accident year 2018 ultimate claims using the reported claim development technique.
Part b (0.5 points)
Briefly describe two factors the company should take into consideration prior to supplementing their own loss development data with industry loss development data.
Part c (0.5 points)
Describe the impact that doubling the number of claims handlers may have on the reported development technique.
Answer this question and see the worked solution
Concepts tested
- Chain Ladder Method
- Age to Age Factor
- Tail Factor
- Development Triangle
- External Information in Reserving
- Claims Processing Changes