Part (i)
->Need paid claims development if discounted reserves required
To discount the reserves you would use the development pattern obtained from projecting a paid claims triangle and not an incurred claims triangle.
->Alternatively project at gross level and analyse the trend in reinsurance to
gross ratios for premiums, paid, incurred, outstanding claims in order to
select reinsurance IBNR ratios.
Instead of projecting net triangles, you could project gross triangles and apply net to gross (or reinsurance to gross) ratios to estimate the net reserves.
->Claims and premiums are calculated on the same basis (what basis is this?)
Whenever you calculate a loss ratio you need to make sure that the numerator and the denominator correspond. So if you have earned premiums you should use incurred claims, for example.
->The method assumes that the movement in exchange rates move in exactly
offsetting ways to movements in inflation.
Because the previous diagonals are not adjusted for exchange rate movements, this method effectively lumps all exchange rate movements into the latest diagonal.
Part (iv)
You have already allowed for the premium rates changes when adjusting the loss ratios. If you weight with adjusted premiums you would effectively be double counting this.
Last edited: Sep 18, 2015
