Spring 2017 #12
for Part a)
For UW income, the solution uses change in case reserves to add on to the Net Paid losses to get Net incurred losses which is then subtracted from EP (along with Other UW expenses)...
Instead of computing the change in case reserves, would it have been acceptable to use the One year prior development to add on to the Net paid losses?
It seems like we're supposed to assume that the Losses unpaid are cumulative for all three years, but the paid losses are "Incremental" for each CY? With that assumption I think I can see why we should compute the change in Case.
Comments
for part c). Can you point me a wiki with more detail on Notes to financial statements no. 23?
(165,45,120,20) are total reserves (case+IBNR) as of end of the given years.
One-year development is not CY incurred.
There is no Note 23- specific wiki. Your best bet is Odomirok.
I understand that one-year development is not CY (current-year) incurred. But there's a term in the formula subtracting development from Prior year which sounds like the 66=one year development in this case...
I'll call method i) "one-year development on prior AY losses" (as in summary sheet)
AND
ii) paid+change in case
I'm wondering if my confusion is related to Accident year vs calendar year. If we're computing U/W income on an Accident year basis then I'd use the i) "one-year development on prior AY losses" version of the term. If we're computing UW income on a Calendar year basis then I'd have to use the ii) method (used in this problem).
When do we use i) or ii)?
Thanks.
One-year development, the one used in IRIS 11, is the change in ultimates. You can't add this to paid and get calendar year incurred.
U/W income is on calendar year basis. There is no u/w income on accident year basis.