CAS Exam 7 Spring 2018, Question 4

Study guide: Exam 7

Given the following information:

• The equation for the line in the graph above is y = 0.1126 + bx.
• \overline{xy} = 0.5979
• Cumulative incurred loss for accident year 2017 at 12 months is $6,000,000.
• Earned premium for accident year 2017 is $8,000,000.
• Assume there is no further development after 24 months.

Calculate the ultimate loss for accident year 2017 using the least squares method.

Part a (2 points)

Answer this question and see the worked solution

Concepts tested

• Loss Development
• Linear Regression
• Least Squares Development Method

More questions from this set

• CAS Exam 7 Spring 2018, Question 3
• CAS Exam 7 Spring 2018, Question 5