Modify a reserve analysis when the environment moves under it: case reserve adequacy shifts, settlement rate changes, business mix or rate level changes, and inflation or legal developments.
Free CAS Exam 5 (Basic Ratemaking and Reserving) lesson in Estimating Claim Liabilities. 21 min read, ~3,093 words.
Case reserve strengthening inflates reported (incurred) development factors, so a reported chain ladder overstates ultimate until you correct it; weakening understates. Settlement acceleration inflates apparent paid maturity, so a paid chain ladder overstates ultimate; a slowdown understates. Before adjusting, consider rearranging the data: swap claim counts for earned exposures, accident...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- B11
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