- TIA EXAM 5 - FRIEDLAND CH 10 - 11

 The flashcards below were created by user CDP on FreezingBlue Flashcards. 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 PLIncreasing CL in BOB What are 3 common uses of Freq-Severity Technique 1. Used with AY, PY, RY & CY data2. 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 seasonLess 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 recoveriesconservative case reserves List the 4 steps of the Freq-Sev Approach #1 - Dvt tech with CC & Severities 1. Project and Select ult Claim Counts2. Project Ult Severity3. Project Ult Claims4. Develop unpaid claim estimate List the 5 steps of the Freq-Sev Approach #2 - Incorporate exposures and inflation 1. Project and Select ult Claim Counts2. Compare ult claimcounts to exposures and select freq3. Project Ult Severity4. Project Ult Claims5. 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 AY2. Develop disposal rate triangle and select disposal rate by maturity age3. Project claim counts by AY and maturity (complete the square)4. Analyze severities and select severity by maturity5. Calculate severity by maturity age and AY (complete square)6. Multiply CC by severity to determine projected claims7. 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 inflationMay also use wtded exponential least squares to give more weight to recent yearsLinear proj used rarely: implies decreasing % trendRun many GOF on regressionOnly 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 age2. Often related to smaller # of claims in data set at older maturities3. 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 eraticInfluence 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 & sevinflation AuthorCDP ID76449 Card Set- TIA EXAM 5 - FRIEDLAND CH 10 - 11 DescriptionFRIEDLAND CH 10 - 11 Updated2011-03-31T18:29:10Z Show Answers