CAS Exam 5 Fall 2019, Question 24
Study guide: Exam 5
Given the following information, as of December 31, 2018:
| Calendar Year | Paid Claims | Incurred Claims | Paid ULAE |
|---|---|---|---|
| 2015 | 18,700 | 35,500 | 1,870 |
| 2016 | 19,200 | 36,500 | 1,890 |
| 2017 | 18,900 | 36,400 | 1,910 |
| 2018 | 19,800 | 37,400 | 1,990 |
| Report Year | Earned Premium | Paid Claims | Reported Claims | Percent Unreported |
|---|---|---|---|---|
| 2015 | 77,600 | 22,400 | 29,500 | 10.7% |
| 2016 | 78,000 | 14,300 | 26,200 | 23.1% |
| 2017 | 77,800 | 5,500 | 20,700 | 55.9% |
| 2018 | 77,900 | 2,800 | 19,000 | 76.3% |
- The expected claims ratio for this book of business is 45%.
- All policies are claims-made.
Part a (1.5 points)
Calculate unpaid ULAE at December 31, 2018 using the Kittel refinement.
Part b (0.75 points)
Fully describe how the calculation in part a. above would change if the policies for this book of business were occurrence instead of claims-made.
Answer this question and see the worked solution