CAS Exam 7 Spring 2017, Question 3

Study guide: Exam 7

Given the following information:

Accident Year	Cumulative Reported Loss ($000): 12 Months	24 Months
2011	1,000	1,950
2012	1,200	2,650
2013	1,800	3,500
2014	1,500	3,300
2015	2,000	4,100
2016	2,400

$\text{Var}(C_{i,k+1} \mid C_{i1}, \dots, C_{ik})$ is constant for all $i$ where $C_{i,k}$ is the accumulated total claims amount of accident year $i$ up to development year $k$ .

Part a (1 point)

Calculate the age-to-age factor for 12 to 24 months using the most appropriate formula according to Mack.

Plot the residuals against the cumulative reported loss as of 12 months and interpret the results.