The first step is calculating the incremental paid loss and dividing by
the ultimate claims. The denominator is the same in each interval. You
get a triangle like:
1914 1438 1057 486 105
2101 1587 1055 532
2316 1746 1158
2546 1924
2800
To fill in the future values, you take an average in the column of the
trended amounts, each one to the appropriate power. Example: for 24
months, the AY 1996 value is [(1438)*(1.1)^4 + (1587)*(1.1)^3 +
(1746)*(1.1)^2 + (1924)*(1.1)] / 4 The other values for AY 1996 (the
only AY we are asked to find) are 1451, 710 and 154. Then to calculate
the ultimate paid losses you multiply them back by the ultimate claim
count to get the IBNR, add in the losses paid, and you get an ultimate
paid loss of 903,375
Paul Wilbert
>----------
>From: Peter Cooper[SMTP:scmakes3@idirect.com]
>Sent: Saturday, September 12, 1998 14:33
>To: studygroup7@lists.casact.org
>Subject: Berquist/Sherman 1997 essay question, Reserving method #3
>
>I'm having problems with the above question and the CAS does'nt help a whole
>lot either.
>
>Wondering if anybody has a better solution or understands the subject better
>than the CAS.
>
>Thanks
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><DIV><FONT color=#000000 size=2>I'm having problems with the above question
>and
>the CAS does'nt help a whole lot either.</FONT></DIV>
><DIV><FONT color=#000000 size=2></FONT> </DIV>
><DIV><FONT color=#000000 size=2>Wondering if anybody has a better solution or
>understands the subject better than the CAS.</FONT></DIV>
><DIV><FONT color=#000000 size=2></FONT> </DIV>
><DIV><FONT color=#000000 size=2>Thanks</FONT></DIV></BODY></HTML>
>