Re: Stanard questions

Jason T. Sash ( (no email) )
Fri, 04 Sep 1998 07:03:54 -0500 (Central Daylight Time)

The reserving portion of Stanard's model only accounts for inflation
at the time of reporting and does not make any adjustment for the
inflation between the time of reporting and payment. Essentially it
reserves claims at the amount that they would be settled for if they
were paid when they were reported and not at the later actual payment
date.

I'm not completely sure about the second question. I believe that it
might have to do with the same bias in method 1, the age-to-ultimate
factors (f). Since they produce an upward bias for method 1, I can
only assume that they also produce an upward bias for the Modified B-F
method as well. Someone else can either confirm this or provide
another answer.

On Thu, 03 Sep 1998 21:22:46 -0400 Jim Shoenfelt
<jimshoenfelt@amdyne.net> wrote:

> Why does Stanard's method of generating losseson oaverage lead to underreserving by (Ip/Ir) - inflation betweenreport & pmt?
>
> And why does Stanard say the the BornhuetterFerguson modified method has upward inherent bias in each age-to-age ultimate prediction?
>

----------------------
Jason T. Sash
Jason.T.Sash@EMCIns.com