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- TIA EXAM 5 - FRIEDLAND CH 10 - 11
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Changes in Product Mix -> greater % of CL vs PL causes Cape Cod Method to over, under or accurately state IBNR?
Method understates IBNR
30% rate inc for CL, 5% for PL
Increasing CL in BOB
What are 3 common uses of Freq-Severity Technique
1. Used with AY, PY, RY & CY data
2. Appropriate for all lines of insurance (most often used with long-lines)
3. Freq-Sev methods often refer to ult clm x ult sev without direct use of exposure (even if there is one in def)
What could cause lower closed-to-reported at Dec 31?
Higher # clms rpted at begining of winter season
Less time to process Nov & Dec winter claims by year end
**Must consider this since causes differences in age-to-age factor selection
Name 2 reasons why/how we get negative IBNR?
salvage and subrogation recoveries
conservative case reserves
List the 4 steps of the Freq-Sev Approach #1 - Dvt tech with CC & Severities
1. Project and Select ult Claim Counts
2. Project Ult Severity
3. Project Ult Claims
4. Develop unpaid claim estimate
List the 5 steps of the Freq-Sev Approach #2 - Incorporate exposures and inflation
1. Project and Select ult Claim Counts
2. Compare ult claimcounts to exposures and select freq
3. Project Ult Severity
4. Project Ult Claims
5. Develop unpaid claim estimate
List the 7 steps of the Freq-Sev Approach #3 - Disposal Rate Technique
1. Project ult claim counts & select ult claim counts by AY
2. Develop disposal rate triangle and select disposal rate by maturity age
3. Project claim counts by AY and maturity (complete the square)
4. Analyze severities and select severity by maturity
5. Calculate severity by maturity age and AY (complete square)
6. Multiply CC by severity to determine projected claims
7. Determine unpaid claim estimate
Describe the trend selection process when adjusting severity to common time period
Common to use exponential regression analysis
: implies constant % increase in inflation
May also use wtded exponential least squares to give more weight to recent years
Linear proj used rarely
: implies decreasing % trend
Run many GOF on regression
Only a few data points not meaningful
Why would one see variability in severities and what would you do about it?
Combine experience of several maturity ages
Results from:
1. 1 or more large claims closed at older age
2. Often related to smaller # of claims in data set at older maturities
3. Combining data may limit influence of these factors
Name 3 considerations for the selection of maturity age to combine data
Age at which results become eratic
Influence on total projections of selecting a particular age
% of claims expected to be closed beyond selected age
Name another use for the Freq-Sev Projection, other than an estimate on its own
Projected Ult Clms from Freq-Sev technique is often valuable as an alternative expected claims estimate for BF
Actuary may feel more comfortable with this than expected claims ratio
Name 2 enhancements for Freq-Sev Technique
Seasonality on freq & sev
inflation
Author
CDP
ID
76449
Card Set
- TIA EXAM 5 - FRIEDLAND CH 10 - 11
Description
FRIEDLAND CH 10 - 11
Updated
2011-03-31T18:29:10Z
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