CAS Exam 7 Spring 2018, Question 16
Study guide: Exam 7
Given the following information:
| Accident Year | Rate-Level Adjusted Premium ($000) | Aggregate Reported Loss at Dec. 31, 2016 ($000) | Aggregate Loss Report Lag at Dec. 31, 2016 | Aggregate Reported Loss at Jun. 30, 2017 ($000) | Aggregate Loss Report Lag at Jun. 30, 2017 |
|---|---|---|---|---|---|
| 2014 | 6,000 | 3,000 | 0.70 | 3,500 | 0.75 |
| 2015 | 7,000 | 2,000 | 0.50 | 2,200 | 0.55 |
| 2016 | 10,000 | 4,000 | 0.30 | 4,800 | 0.35 |
| Total | 23,000 | 9,000 | N/A | 10,500 | N/A |
- The selected credibility factor is 0.50.
Part a (2.5 points)
Test the total expected claims emergence from December 31, 2016 to June 30, 2017 against the total actual claims emergence using a credibility-weighted combination of the Stanard-Bühlmann and chain ladder methods.
Part b (0.5 points)
Provide two reasons which would explain the difference calculated in part a. above.
Answer this question and see the worked solution