Friedland Part IV

  1. DCC and A&O
    • DCC: defense and cost containment; includes defense litigation and medical cost
    • A&O: adjusting and other; includes claim adjusting expenses
  2. Ratio of pd ALAE to pd clm - multiplicative
    • Ult ALAE = Ult clms 8 Ult ratio of pd ALAE to pd clm
    • Assumptions: relationship btwn ALAE and clms is relatively stable
    • + recognizes relationship btwen ALAE and clms
    • + not highly leveraged
    • + easy to interject actuarial judgment
    • - any error in estimate of clms affect est of ALAE
    • - large amts of ALAE may be spent on clms with no pmt
  3. Ratio of pd ALAE to pd clm - additive
    • Take difference btwen ratios at successive ages
    • Age-to-ultimate factor = cum sum from age to ult
    • + more stable approach when ratios are very small
  4. Choosing a technique for est ALAE
    • Types of data available
    • Credibility of data
    • Understand how insr's environment affect projections
Card Set
Friedland Part IV
Exam6 by Esaie Friedland Part IV