Excess (Deficiency) Problems

Problem 1: Calculate and interpret the excess (deficiency).

undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior	$100
paid during CY 2022 for AYs 2021 & prior	$30
undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior	$70

• excess (deficiency)

= 100 - 30 - 70

= 0

→ there is neither an excess nor a deficiency - the actuary's prior estimate of the liabilities was accurate (as measured against the latest available information)

Problem 2: Calculate and interpret the excess (deficiency).

undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior	$100
paid during CY 2022 for AYs 2021 & prior	$30
undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior	$73

• excess (deficiency)

= 100 - 30 - 73

= 3

→ the actuary's prior estimate of the liabilities was deficiency by $3 (as measured against the latest available information)