Pinto & Gogol

3 Most Common Ways To Treat ALAE in Excess Reinsurance Contracts
- 1. ALAE is added to the pure loss amount and the total is treated as one in determining coverage
- 2. ALAE is assigned to an excess layer on a pro rata basis
- 3. ALAE is not included in the coverage
5 Reasons RAA Data Begins To Show Higher Development Than The Curves Fitted To ISO Data After 99 Months
- 1. RAA data includes aggregate reinsurance coverages, which often have a more extended loss development
- 2. Unidentified longer tailed medical malpractice losses are present in the RAA data
- 3. RAA data includes excess & surplus lines and umbrella business written at higher limits
- 4. RAA is based on actual data at all maturities where the ISOdata was curve fitted5. A mix of business had to be assumed to weight the ISO fitted LDFs together to approximate the RAA LDFs
Given Excess LDF for Lower Retention, Find Excess LDF for Higher Retention
- LDF = d * (x / k)^(q_i-q_j), where
- 1. d = the excess LDF at the lower retention
- 2. x = the new higher retention
- 3. k = the lower retention
- 4. q_i = Single Parameter Pareto q at earlier age
- 5. q_j = Single Parameter Pareto q at later age

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Esaie

26183

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Pinto & Gogol

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Updated

2010-07-09T20:40:19Z

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