CAS Exam 7 Spring 2019, Question 3
Study guide: Exam 7
Given the following information as of December 31, 2018:
| Accident Year | Earned Premium ($000) | Incremental Paid Loss at 12 Months ($000) | Incremental Paid Loss at 24 Months ($000) | Incremental Paid Loss at 36 Months ($000) |
|---|---|---|---|---|
| 2016 | 800 | 320 | 220 | 80 |
| 2017 | 600 | 300 | 200 | |
| 2018 | 400 | 280 |
- Assume there is no loss development beyond 36 months.
Part a (2 points)
Calculate the total Neuhaus loss ratio claims reserve estimate.
Part b (0.5 points)
Describe why the Neuhaus method may not be appropriate for the data in the table above.
Answer this question and see the worked solution