CAS Exam 7 Spring 2018, Question 14
Study guide: Exam 7
Part a (0.5 points)
A claims person, faced with insufficient and possibly conflicting information about a potentially serious claim, may tend to reserve to "expectation," which is most likely interpreted by the claims person as the mode of the probability distribution.
Briefly describe two ways this practice can make reinsurance reserving difficult.
Part b (0.75 points)
Briefly describe three reasons heterogeneous exposures assumed by a reinsurance company can make reinsurance reserving difficult.
Answer this question and see the worked solution