Assignment 1 Solutions

Assignment 1 Solutions - 1. Use the transactional data to...

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1. Use the transactional data to create the cumulative data: a) AY 2006 Incurred at December 31, 2007 = $1,400 b) RY 2007 Paid at December 31, 2008 = $1,250 c) CY 2007 Incurred = 2,295+1,400+2,800-(900+2,400) = $3,195 2. Total paid in CY 2010 = $80,000 + 5($2,500) + 5($5,000) = $117,500 Total Reserve Change = 5(-$7,500) + 5(-$7,500) + 5(-$2,500) + 5($10,000) = -$37,500 Total CY 2010 Incurred = $117,500 - $37,500 = $80,000 Salvage is a recovery: Total CY 2010 Incurred = $80,000 - $5,000 = $75,000 Note: This solution is different than that presented in class because different assumptions were made about the increase in reserve to $10,000. The solution in class is more correct and reduces the result by $37,500. Paid Triangle 12 24 36 48 2005 500 700 2300 2300 2006 700 900 1050 2007 720 900 2008 500 Case Triangle 12 24 36 48 2005 1200 1700 500 500 2006 200 500 200 2007 1575 1000 2008 500 Incurred Triangle 12 24 36 48 2005 1700 2400 2800 2800 2006 900 1400 1250 2007 2295 1900 2008 1000
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3. Calculate the incurred loss triangle and then the ratio of paid to incurred:
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This note was uploaded on 02/08/2012 for the course ACTSC 463 taught by Professor Vankooten during the Fall '11 term at Waterloo.

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Assignment 1 Solutions - 1. Use the transactional data to...

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