• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Q8(vi-a), Apr. 2016, ST7

S

Smith

Member
Assuming the year required is 2015, then, i have a solution to derive the expected incurred loss in year 2015, different from the two approaches provided in the examiners' report, as below:

1) calculate IBNR as at 31/12/2015 based on BF, similar with that in (iv), i.e. use Ult.-loss-BF of UWY y - (Ult.-loss-CL of UWY y * % dep. y-1)
2) use the IBNR as at 31/12/2014 - the IBNR as at 31/12/2015 (calculated above), to derive the expected incurred loss in year 2015.

does it make sense? but a little bit difference from the results of the two approaches since UWY 2011 and onwards. not so sure why.

thanks!
 
As the exam question had an error in it (yes, they did mean 2015), they accepted a wide range of potential answers as long as the assumptions were appropriate. So it may be that your approach would have scored some marks. However, be careful as IBNR is only one component of outstanding claims, and incurred claims in one year is the sum of paid claims and the increase in all outstanding claims (including IBNR). So the calculation can be quite complicated.
This is all explained in ASET.
 
You must log in or register to reply here.
Back
Top