Understand, interpret, and apply techniques for estimating outstanding claims, using Expected Loss Ratio, Chain-Ladder, Bornhuetter-Ferguson, Bayesian, and Frequency and Severity methods.
Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Reserving and Pricing for Short-Term Insurance Coverages. 32 min read, ~4,781 words.
Expected Loss Ratio (ELR): Ultimate = ELR × Earned Premium. Ignores actual emergence. Best for green, immature years. Chain-Ladder: Ultimate = latest cumulative × product of future age-to-age factors. Trusts the data, ignores prior expectations. Bornhuetter-Ferguson: Ultimate = Reported + (1 − 1/CDF) × Expected Ultimate. A weighted blend of...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 6a
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