Handle large losses in a reserve study so a few big claims do not distort the estimate.

Free CAS Exam 5 (Basic Ratemaking and Reserving) lesson in Estimating Claim Liabilities. 16 min read, ~2,348 words.

Large losses are low-frequency, high-severity claims that emerge erratically and distort age-to-age factors if left in the raw triangle. Two coequal treatments: cap each claim at a large-loss threshold (excess to its own bucket) or exclude the whole large claim from the triangle; either way add a separately estimated large-claim...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• B12

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