Exam 5 Practice Question 5
Study guide: Exam 5
Match each reserving characteristic to the type of insurance it describes. An option may be used more than once or not at all.
Part a (1 point)
Paid claims and case outstanding already make up a high proportion of ultimate claims at early maturities.
- A) Short-tail line, such as automobile physical damage
- B) Long-tail occurrence line, such as medical malpractice occurrence
- C) Claims-made coverage
- D) Low-frequency, high-severity group of claims
Part b (1 point)
Its experience should be kept separate from occurrence experience, and actuaries often prefer report-year aggregation for it.
- A) Short-tail line, such as automobile physical damage
- B) Long-tail occurrence line, such as medical malpractice occurrence
- C) Claims-made coverage
- D) Low-frequency, high-severity group of claims
Part c (1 point)
Reserve estimates for it tend to be less accurate, so its evaluation ordinarily requires more extensive analysis.
- A) Short-tail line, such as automobile physical damage
- B) Long-tail occurrence line, such as medical malpractice occurrence
- C) Claims-made coverage
- D) Low-frequency, high-severity group of claims
Part d (1 point)
IBNR is a large share of the unpaid claims at early maturities, and the cumulative development factors for the most recent accident years are highly leveraged.
- A) Short-tail line, such as automobile physical damage
- B) Long-tail occurrence line, such as medical malpractice occurrence
- C) Claims-made coverage
- D) Low-frequency, high-severity group of claims
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