CAS Exam 5 Fall 2019, Question 23
Study guide: Exam 5
Given the following information for accident year 2015:
Accident Year 2015 — a bar chart of ultimate claims ($ millions) for accident year 2015, estimated by four techniques (Reported Development, Reported Bornhuetter-Ferguson, Reported Cape Cod, and Frequency/Severity), with each group of bars showing the estimate as of a successive year-end evaluation.
Reading the chart approximately:
| AY2015 evaluated as of | Reported Development | Reported Bornhuetter-Ferguson | Reported Cape Cod | Frequency / Severity |
|---|---|---|---|---|
| 2015 | ~138 | ~165 | ~96 | ~190 |
| 2016 | ~141 | ~171 | ~130 | ~191 |
| 2017 | ~166 | ~172 | ~161 | ~184 |
| 2018 | ~177 | ~178 | ~178 | ~180 |
- Tort reform enacted January 1, 2015, resulted in a drastic increase in severity.
Discuss the year-over-year progression of each technique in response to the law change.
Part a (2 points)
Answer this question and see the worked solution
Concepts tested
- IBNR
- Bornhuetter-Ferguson Method
- Cape Cod Method
- Frequency-Severity Method
- Changing Conditions
- Chain Ladder Method