CAS Exam 5 Spring 2019, Question 24
Study guide: Exam 5
Given the following information:
Cumulative Paid Claims Only as of (months):
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2015 | 3,800 | 10,640 | 15,960 | 17,556 |
| 2016 | 3,900 | 10,920 | 15,600 | |
| 2017 | 3,850 | 11,858 | ||
| 2018 | 4,050 |
Cumulative Paid ALAE as of (months):
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2015 | 77 | 316 | 512 | 571 |
| 2016 | 81 | 337 | 517 | |
| 2017 | 75 | 334 | ||
| 2018 | 82 |
| Accident Year | Selected Ultimate Claims Only |
|---|---|
| 2015 | 17,500 |
| 2016 | 17,900 |
| 2017 | 17,600 |
| 2018 | 18,500 |
- There is no development beyond 48 months.
Part a (1.25 points)
Estimate ultimate ALAE for accident year 2018 using the multiplicative ratio development approach.
Part b (0.25 points)
Briefly describe when it is more appropriate to use an additive development approach than a multiplicative development approach.
Part c (0.5 points)
Briefly describe one advantage and one disadvantage of the ratio techniques.
Answer this question and see the worked solution