Hi everyone, regarding the discounted accounts, why is o/s claims c/f = o/s b/f*1.05=1,144.01? This calculation includes the claims paid in the year for the last 3 years (not including current). The calculation also does not include OS amounts expected to be paid from claim in the current year? Thanks in advance for your help on this!
The loss ratio is constant. So if premiums are going up by 5% each year, then so will the outstanding claims at each subsequent year-end. Then the claims incurred is claims paid in that year plus the increase in outstanding over that year.
