Estimating Outstanding Claims
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Pricing and Reserving for Short-Term Insurance Coverages. 14 min read, ~2,111 words.
Reserve = ultimate losses - paid losses; IBNR = ultimate losses - incurred losses. ELR: Ultimate = ELR EP. Ignores actual reported data entirely. Chain-Ladder: Ultimate =, with CDF from chained age-to-age factors. Fully data-driven. BF: Ultimate =. Blends actual reported with a priori expected unreported. Percent developed =; percent...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 5a
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