CAS Exam 5 Spring 2019, Question 19

Study guide: Exam 5

Given the following as of December 31, 2018:


2,500	Earned premium ($000s)
60%	Expected claims ratio
1,285	Reported claims at 12 months ($000s)
1.385	Reported age-to-ultimate factor at 12 months
625	Paid claims at 12 months ($000s)

Tort reform is passed on January 1, 2019, with an expected reduction of 20% on future claim payments.

Determine the ultimate claims using the following techniques incorporating tort reform:

i. Reported development technique.

ii. Reported Bornhuetter-Ferguson technique.

Part a (1.25 points)