# Conger & Nolibos

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1. Dollar-based vs Count-based ULAE methods
• Dollar-based assumes ULAE tracks w. loss dollars
• Count-based assumes that same kind of transaction vost same amt of ULAE
• Divergent assumptions may not affect results severely (only need to be correct for the avg)
2. Classical pd to pd ratio for ULAE
Generally assumes that 50% of ULAE occurs when clm is rpt, and 50% when it's closed
3. Kittel's refinement for ULAE
• Explicitely recognize the fact that ULAE is inc as clm as rpt, even when no loss pmt are made
• Use ratio of pd ULAE to ½*(pd + inc)
4. Generalized approach to est ULAE
• Definitions
• U1/2/3 = & of ult ULAE spent on opening/maintaining/closing
• R/C/P = ult cost for clms rpt, closed, pd
• W = ratio of ult ULAE to ult losses
• M = total ULAE for period
• B = loss basis for period
• Formulas
• M = (R*U1*W) + (P*U2*W) + (C*U3*W)
• B = M / W
• Final result
• Approach similar to ELR: Unpd ULAE = (W** L) - M
• Approach similar to BF: Unpd ULAE = W* * (L - B)
• Approach similar to dvpmt: Unpd ULAE = M * (L / B - 1)
5. Generalized approach to est ULAE
Practical difficulties
• Inconsistencies in the reporting of clm adj exp
• Estimation of R and C may not be trivial
• Ignores cost of reopening and reclosing
• Loss inflation can cause material distortions

### Card Set Information

 Author: Esaie ID: 33888 Filename: Conger & Nolibos Updated: 2010-09-11 01:58:07 Tags: Exam6 by Esaie Folders: Description: Exam6 by Esaie Conger & Nolibos Show Answers:

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