CIA - Runoff Flashcards
1
Q
Describe the methods to handle the time value of money in claims runoff. (2)
A
- DISCOUNTING:discount the paid and unpaid amounts at time (t) back to time (t-1)
- SUBTRACTION: subtract investment income earned during the CY(t) on supporting assets & liabilities.
Note: that the Subtraction method is easier than the Discounting method.