First, B-S calculate ultimate losses in a bunch of different ways. Boil
it down to average ultimate reported claim. Subtract paid per claim.
Multiply by number of claims to get ultimate reserves.
The motivation is to be able to ask yourself all kinds of "does this
make sense to me" questions.
Remember the title of the paper: Loss Rsv Adequacy Testing.
> -----Original Message-----
> From: Gardner, Brad [SMTP:bgardner@scc.state.nm.us]
> Sent: Wednesday, August 05, 1998 4:00 PM
> To: 'studygroup7'
> Subject: More on Berquist-Sherman
>
> Sorry to beat a dead horse but on page 135. paragraph 3 of the B-S
> paper, they are applying a variety of reserving methods to certain
> data.
> The data is in the form paid losses per ultimate reported claims. This
> ratio does not make sense. We are comparing paid losses to closed,
> open
> and IBNR claims? Paid losses per closed claims make sense to me
> (Wiser-average paid per closed claim). What am I missing???
>
>
> Thanks
>
> Brad P. Gardner
>