CAS Exam 7 Spring 2013, Question 13
Study guide: Exam 7
An insurance company has a portfolio of workers compensation, medical malpractice and commercial property business. The portfolio has been in existence for over ten years and currently the volume of business written in each line is stable.
Part a (1 point)
The company believes that the unpaid claim reserves for its property business have recently become more uncertain than its reserves for workers compensation and medical malpractice. Discuss two possible reasons for this conclusion.
Part b (0.75 points)
Identify three sources of risk the company should consider in order to avoid underestimating the degree of uncertainty in its unpaid claim reserves for workers compensation.
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