Practice: 4 problems on the basic BF method

jj96gotthisjj96gotthis
in F-09-BornFerg

Hi,

For the comments here in the pdf, the second line does not really make sense to me...

Shouldnt it be

case reserves = reported - paid

IBNR = ultimate - reported or IBNR = unpaid - case reserves?

image.png

Thank you!

Comments

  • GrahamGraham

    Typo. I've uploaded an updated version. Thx!

  • StudyFor5StudyFor5

    Hi Graham -

    Spring 2015, Question #19a

    We need to back into the Expected Claims by using the numbers provided for the Paid B-F. I derived the Expected Claims by using the oldest AY (which was 2012) and so did the Examiner's Report. But if you use a similar method to back into the Expected Claims for AY 2013 or 2014, it does not exactly match the value for AY 2012 (which was 10.000). I would expect those Expected Claim values to be identical for all AY's. Why is that not the case? If we had used an Expected Claims value of 9.943 (the answer you get for AY 2013) would we still receive full credit? If we see a problem like this in the future, should we always start with the oldest AY to back into the Expected Claims?

    Thanks!

  • GrahamGraham
    edited March 2022

    Hi @bmrosemo

    I'm traveling today so I will answer your question tomorrow (Thursday) morning.

  • GrahamGraham

    You're right that you should get the same expected claims ratio all 3 AYs because that was explicitly stated in the question. They just weren't careful enough when they created the problem. You should get full credit regardless of which AY you chose to back into the expected claims ratio.

    There is also a small error in the solution when they calculated the reported CDF for AY 2012. They wrote:

    • 10.4 / 7.8 = 1.397

    The "1.397" is correct but the "10.4" should have been "10.9".

  • StudyFor5StudyFor5

    Thanks Graham! I didn't even notice the 10.4 since the 1.397 was correct. Good find.

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