CAS Exam 5 Spring 2019, Question 20
Study guide: Exam 5
Given the following information as of December 31, 2018:
Incremental Closed Claim Counts as of (months)
| Accident Year | 72 | 84 | 96 |
|---|---|---|---|
| 2011 | 141 | 81 | 13 |
| 2012 | 145 | 61 | |
| 2013 | 59 |
Incremental Paid Claims ($000s) as of (months)
| Accident Year | 72 | 84 | 96 |
|---|---|---|---|
| 2011 | 7,600 | 6,100 | 2,400 |
| 2012 | 8,800 | 3,900 | |
| 2013 | 5,600 |
| 6% | Annual severity trend |
| 20% | Reduction in claim costs from legislative change for claims occurring after January 1, 2012 |
Part a (1.5 points)
Estimate the trended tail severity for age 84 and older at 2018 cost levels.
Part b (0.5 points)
Briefly describe two considerations when choosing the maturity age of the tail severity.
Answer this question and see the worked solution