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September 2015 Qu7 (iv)

A

avnish

Member
Hi everyone
For the Advanced effort ‐ adjustment for under‐representation of longer delays. There are 10 columns in the answer. I understand the first 7 columns.
Getting to column 8, earned premium by month- Month 1 would be December while Month 12 would be January right?
Column 9, reading across, how could month 12, i.e. January have 76% of IBNR? How could month 5, being August I presume have no IBNR?
For January, business is written on 1 Jan, earned evenly through the year. These are annual policies as assumed by the examiners.
Can anyone help

Thanks
Avnish
 
Getting to column 8, earned premium by month- Month 1 would be December while Month 12 would be January right?
Click to expand...

Not quite. The second half of the table gives you "underwriting months 1 - 12" (whereas previous columns give you the run-off profile). So Month 1 (in column 6) relates to business written in January, and Month 12 is December. So for column 9, month 12 (ie December) will have only earned 1 month by the year end, leaving 76% unreported. In other words, column 9 is the same as column 5, only upside down.
 
So, column 9 month 12, i.e. December will have earned only one month, that is earned only 2.5/12, not 2.5? right?
 
I assume you mean column 6? For the business written AND earned in December, yes. But in December you'll also earn business from the premium written in previous months January to November. So column 6 is the cumulative figure.
 
I finally got it! Thanks a lot to you all. That was daunting.
 
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Hi there, I am having trouble understanding 'LR implied' for this question... what does it actually mean? how is it calculated?
can anyone explain, Thanks!

Edit: I got it, ultimate claims =reported+ unreported+No-enough-reported-margin and LR is implied by estimation of unreported.
 
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