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X3.5 Grossing-up factor

A

ActuarialStudent

Member
How are the grossing-up factors calculated from a delay table?

In this example:

l_x = # IBNR claims at beginning of the month
d_x = # claims reported during month

where

l_0 = 1,000
d_0 = 250

therefore grossing-up factor = 250/1000 = 0.25

also

l_1 = 750
d_1 = 375

and the grossing-up factor = 0.625

I do not understand how the last grossing-up factor is calculated.
Can someone explain please? Thank you.
 
Hi ActuarialStudent,

At 31st Dec, for claim events occurring in November, we are at the end of month 1. Therefore the index tells us that the cumulative number of claims reported so far (as a percentage of the ultimate number of claims) is (250+375)/1000 = 62.5%.

Kind regards,

Katherine.
 
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