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Friedland Part IV
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DCC and A&O
DCC
: defense and cost containment; includes defense litigation and medical cost
A&O
: adjusting and other; includes claim adjusting expenses
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
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
Choosing a technique for est ALAE
Types of data available
Credibility of data
Understand how insr's environment affect projections
Author
Esaie
ID
33863
Card Set
Friedland Part IV
Description
Exam6 by Esaie Friedland Part IV
Updated
2010-09-10T18:51:01Z
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