excans:B49c82a944: Difference between revisions
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'''Solution: B''' | |||
'''Step 1: Calculate year-to-year development factors''' | '''Step 1: Calculate year-to-year development factors''' | ||
Latest revision as of 17:14, 24 October 2024
Solution: B
Step 1: Calculate year-to-year development factors
| Months | Factor |
|---|---|
| 12-24 | (6,700 + 7,300)/(5,250 + 5,250) = 1.3333 |
| 24-36 | 7,500/6,700 = 1.1194 |
Step 2: Calculate expected losses for each accident year
| Accident Year | Expected Loss |
|---|---|
| AY2 | 10,000 *0.72 = 7,200 |
| AY3 | 11,500 * 0.75 = 8,625 |
Step 3: Calculate the reserves for each accident year using the Bornhuetter-Ferguson method
| Accident Year | Expected Loss | Cumulative Development Factor | Reserve |
|---|---|---|---|
| AY2 | 7,200 | 1.1194 | (1-1/1.1194)*7,200 = 767.98 |
| AY3 | 8,625 | 1.3333 * 1.1194 = 1.4925 | (1-1/1.4925)*8,625 = 2,846.11 |
| Total: 3,614.09 |