CAS Exam 7 Spring 2013, Question 1
Study guide: Exam 7
Given the following information:
Age-to-Age Loss Development Factors
| Accident Year | 12-24 | 24-36 | 36-48 | 48-60 | 60-72 |
|---|---|---|---|---|---|
| 2007 | 2.45 | 1.73 | 1.19 | 1.05 | 1.05 |
| 2008 | 5.42 | 1.26 | 1.23 | 1.09 | |
| 2009 | 2.64 | 1.35 | 1.16 | ||
| 2010 | 2.04 | 1.55 | |||
| 2011 | 6.23 |
z-value for 90^{\text{th}} percentile of the normal distribution: 1.645
Part a (2.5 points)
The null hypothesis is that the triangle does not display calendar year effects. Conduct a test to determine whether the null hypothesis should be accepted or rejected at the 90% confidence level.
Part b (0.5 points)
Briefly describe two potential causes of calendar year effects in loss development data.
Answer this question and see the worked solution