SOA GIRRGeneral Insurance — Ratemaking & Reserving

Three accident years each have 1,000 of on-level premium. Reported losses are 650, 520 and 300 with percentages reported of 100%, 80% and 50%. Calculate the Cape Cod expected loss ratio.

A claims department strengthened case reserves two years ago. Which reserving method is most distorted, and in which direction, if applied without adjustment?

Expected losses for an accident year are 500 and 40% of expected losses are estimated to be reported to date. Reported losses to date are 150. Calculate the Bornhuetter–Ferguson ultimate loss estimate.

Describe the frequency–severity reserving method and explain one advantage it has over aggregate chain-ladder development when claim-count reporting patterns are stable but average severities are shifting due to a change in mix of business.