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The flashcards below were created by user
Esaie
on FreezingBlue Flashcards.
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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
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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
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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
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Choosing a technique for est ALAE
- Types of data available
- Credibility of data
- Understand how insr's environment affect projections
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