SOA Exam FAM Sample Question 72
Study guide: Exam FAM
You are given:
i)
| Accident Year | Cumulative Paid Losses through Development Year 0 | 1 | 2 | 3 | 4 | 5 | Earned premium |
|---|---|---|---|---|---|---|---|
| AY4 | 1,400 | 5,200 | 7,300 | 8,800 | 9,800 | 9,800 | 18,000 |
| AY5 | 2,200 | 6,400 | 8,800 | 10,200 | 11,500 | 20,000 | |
| AY6 | 2,500 | 7,500 | 10,700 | 12,600 | 25,000 | ||
| AY7 | 2,800 | 8,700 | 12,900 | 26,000 | |||
| AY8 | 2,500 | 7,900 | 27,000 | ||||
| AY9 | 2,600 | 28,000 |
ii) The expected loss ratio for each Accident Year is 0.550.
Calculate the total loss reserve using the Bornhuetter-Ferguson method and three-year arithmetic average paid loss development factors.
- A) 21,800
- B) 22,500
- C) 23,600
- D) 24,700
- E) 25,400
Answer this question and see the worked solution