Assignment 3

Assignment 3 - 1. XYZ Insurance Company has been writing...

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1. XYZ Insurance Company has been writing business since 1/1/2005 and has provided you with following incurred loss data evaluated at 12/31/2009: Report Year Accident Year 2005 2006 2007 2008 2009 2005 10,000 4,000 2,000 1,000 - 2006 12,000 5,000 2,500 1,500 2007 16,000 6,500 3,500 2008 18,000 7,000 2009 20,000 Development Interval Accident Year Report Year 1-2 Years 1.50 1.10 2-3 Years 1.25 1.10 3-4 Years 1.10 1.00 4-5 Years 1.10 1.00 5-Ultimate 1.05 1.00 Assuming the development factors are correct, estimate unreported losses as of 12/31/2009. 2. List two things that make the selection of a tail factor difficult.
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3. What is the estimate of unpaid claims as of 12/31/2009 for accident years 2005 to 2009, using the Bornhuetter-Ferguson technique and the following information? Accident Year Earned Premium Expected Ult Claim Ratio Claims Paid to Date 2005 1,000,000 0.65 650,000 2006 1,000,000 0.65 650,000 2007 1,000,000 0.70 500,000 2008 1,000,000 0.70 500,000 2009 1,000,000 0.80 500,000 Accident Year Ultimate Paid Development Factors 2009 to Ultimate 2.000 2008 to Ultimate 1.600 2007 to Ultimate 1.250 2006 to Ultimate 1.105 2005 to Ultimate 1.000 4. You are given the following information as at December 31, 2009: Accident Year Earned Premium Incurred Loss Incurred LDF to Ultimate 2006 15,000 4,500 1.500 2007 16,000 4,800 1.750 2008 17,000 3,200 2.000 2009 18,000 2,500 4.500 The expected loss ratio for all accident years is 65%. The company has no exposure prior to 2006.
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Assignment 3 - 1. XYZ Insurance Company has been writing...

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