Exam 5 Development Technique Flashcards

1
Q

7 steps to develop triangle

A
  1. Compile claims data in a development triangle
  2. Calculate age-to-age factors
  3. Calculate averages of the age-to-age factors
  4. Select claim development factors
  5. Select tail factor
  6. Calculate cumulative claim development factors
  7. Project ultimate claims
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2
Q

Techniques for average of age-to-age factors

A
  1. Simple (or arithmetic) average
  2. Medial average (average excluding high and low values)
  3. Volume-weighted average
  4. Geometric average
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3
Q

What characteristics does actuaries review in claim development factors

A
  1. Smooth progression of individual age-to-age factors and average factors across development periods
  2. Stability of age-to-age for the same development period
  3. Credibility of the experience
  4. Changes in patterns
  5. Applicability of the historical experience
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4
Q

Approaches to evaluate the tail factor

A
  1. Industry benchmark development factors
  2. Fit a curve to the selected or observed development factors to extrapolate the tail factors
  3. Used for paid development where the comparable reported development is already considered to be at ultimate, is to utilize reported-to-paid ratios at the latest observed paid development period
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5
Q

CDF

A

Cumulative Development Factors, project the total growth over the remaining valuation. aka age-to-ultimate factors and claim development factors to ultimate

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6
Q

2 Ways to calculate IBNR

A

projected ultimate claims - reported claims, or , total unpaid claims - case outstanding

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7
Q

reporting pattern of claims

A

percentage of ultimate claims that are reported in each year

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8
Q

immature vs. mature

A

Actuaries refer to the most recent, less-developed accident year as immature;
Oldest, most-developed accident year as mature

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