CAS Exam 7 Spring 2015, Question 13
Study guide: Exam 7
Given the following information for a reinsurer as of December 31, 2014 ($000):
| Accident Year | Earned Premium | Earned Risk Pure Premium | Adjusted Premium | Aggregate Reported Loss | Aggregate Loss Report Lag |
|---|---|---|---|---|---|
| 2011 | 10,000 | 10,000 | 9,000 | 6,000 | 90% |
| 2012 | 11,500 | 11,000 | 12,000 | 5,000 | 70% |
| 2013 | 12,500 | 12,000 | 11,000 | 2,000 | 40% |
| 2014 | 14,000 | 13,000 | 13,000 | 4,000 | 30% |
Part a (1.25 points)
Using the Stanard-Bühlmann Method, estimate the IBNR for all accident years combined.
Part b (0.5 points)
Identify and briefly explain the need for the modification made to earned risk pure premium to derive adjusted premium.
Answer this question and see the worked solution