Sample 25
Loss Ratio = Claims/ Insurance Revenue
Half of Premium for PY 2024 is earned in AY 2024 so EP is half of the total premium
I calculated claims as paid + LIC but the sample solution uses ultimate claims.
My calculation would include discounting, ULAE and RA while the sample solution calculation would not.
Would my solution be wrong or are these two acceptable ways to calculate claims for the purpose of calculating loss ratio?
Comments
Your method will not be accepted. There's no basis of comparison for your method since you have included discounting and RA in your estimate. The comparison you have is the raw loss cost which does not include discounting and RAs
Makes sense, thank you!