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List 5 estimates should be incorporated within methods when estimating unpaid claims, as suggested by B/S
- 1. Projections of reported claims
- 2. Projections of paid claims
- 3. Promections of ult rpt cc and severity
- 4. Estimates of # and ave amt of o/s claims
- 5. Claim ratio estimates
Whenever possible, what 3 types of analysis should be incorportated?
- 1. Credibility
- 2. Regreassion analysis
- 3. Data smoothing
It's the actu's responsibility to select the most appropriate estimate of unpaid claims. What should s/he select & what is gained from analysis?
Select highly stable method and highly responsive
- Informative to see spread of estimates from different approaches
- * Helps with understanding the range and distn of possibilities
- * May show sensitivity of estimates to varying assumptions and various methodologies
List the 4 steps involved in the general selection process for an estimate of unpaid claims
- 1. Actu must select more appripriate estimate of unpaid claims
- * Select from highly stable methods and highly responsive
- 2. Retroactively test methods if sufficient claim history is available
- * Evaluate appropriateness of technique
- * Determine if accurate & unbiased
- 3. Actuary should explain significant differences btwn projections of various mtds* Changes in operations, procedures
- 4. Final check of selected ultimate claims* Include calculation of CR, Sev, Pure Prem, Claim Freq
- * Compared implied Case O/S & unreported claim on open and unrpted clms
When reviewing reasonableness of selected ult clms, what stats should be reviewed?
- perspective of yr-to-yr changes
- knowledge gained from meetings w/ mgmt
- knowledge of industry in general
Name 3 acceptable ways to select ultimate claims
- Select 1 method for all years
- Select different methods for different AYs
- Use a weighted ave based on assigned weights to various mtds
Hugh White's question: You try to establish a reserve but find that the rpted % of expected losses is 8% higher than it should be. List 3 Options & their method names.
- 1. Reduce the Bulk Reserve (IBNR) a corresponding amt b/c you think it was an acceleration in the rate of report
- EC Tech
- 2. Leave the IBNR at the same % level of expected claims b/c you think there was a random fluctuation like a large claim
- BF Tech
- 3. Increase the IBNR proportionatly to the increase in actual reported over expected rpted b/c not 100% sure of exp claim estimate
- Dvmt Tech