CAS Exam 7 Spring 2017, Question 2
Study guide: Exam 7
Given the following loss ratio triangle:
| Accident Year | Cumulative Reported Loss Ratio: 12 Months | 24 Months | 36 Months | 48 Months | 60 Months |
|---|---|---|---|---|---|
| 2010 | 3.0% | 10.0% | 15.7% | 37.0% | 37.0% |
| 2011 | 5.1% | 5.1% | 25.0% | 44.2% | 48.0% |
| 2012 | 2.5% | 3.0% | 40.0% | 57.0% | 59.2% |
| 2013 | 1.6% | 15.7% | 22.2% | 21.0% | |
| 2014 | 0.0% | 7.8% | 16.7% | ||
| 2015 | 6.3% | 12.4% | |||
| 2016 | 4.7% |
- Assume a tail factor of 1.15 from 60 months to ultimate.
Calculate the accident year 2014 ultimate loss ratio using the least squares method.
Part a (1.75 points)
Answer this question and see the worked solution