Dear All I hope you are well. I have two questions for 201304Q9. 1 In the step of working out the insured loss by applying the ILF, the formulae does this: notified claims *0.55/ILF why do we do this? initially i thought i should do notified claims * ILF = insured loss, because ILF is the % of original loss cost which the insurer would bare? Where is 0.55 from? 2 Also, why did we not use the information ' Notified claims are as at 31 March 2013' ? Thanks! Jun
1. 0.55 is the ILF of the layer of cover provided in 2013 that we are trying to price for. We multiply by the ILF of that layer and divide by the ILF of the original layer written in each year. 2. We did (implicitly) use it. The development pattern we were provided was as at 31 March 2013, so needed no adjustment to be applied to data at the same as at date.
Thanks Darren! In which case this makes sense. But where do i see the layer for 2013? I don't see it from the question paper.
