Guardian Royal Exchange Services ltd
Corporate Centre
Royal Exchange
From Paul Klauke Internal tel 723 5624
Actuary Direct tel +44 (0) 171 454 5624
on 14/10/98 14:24 Direct fax +44 (0) 171 696 5336
-------------------------------------------------------------
Our US operations use a method based on Wendy's method, but use
"number of weighted transactions" in lieu of number of claims.
To get weighted transactions we add up all claims transactions, then
add again the number of claim openings (to give the opening of a
claim "double weight"). The decision to give claims opening double
weight was based on conversations with our claims department.
We collect the number of weighted transactions by line, accident year
and valuation, and project future weighted transactions. (We apply
assumed exposure growth to get the most recent accident year since
the data is unavailable at the time.)
We then compare historic calendar year paid ULAE with calendar year
weighted transactions to get paid ULAE per weighted transaction, and
a trend.
By applying projected average ULAE per weighted transaction to
projected weighted transactions we establish ULAE reserves.
A nice side benefit is an easy way to distribute paid ULAE by line
and accident year.
Visit the CAS Web Site at http://www.casact.org
===============================================
To subscribe or unsubscribe from CASNET:
Send an e-mail to caslists@lists.casact.org
Type in the body join casnet to subscribe
or leave casnet to unsubscribe.