The answer to this question states that one of the reasons for this phenomenon is that the claims payment pattern has been sped up in recent accident years. Under a triangulation, the development factor used is based on the average of past claim payment patterns which was slower than in recent years. And hence larger development factors are used than would be the case if the claim settlement pattern of the past, was in line with the pattern of the newer accident years. I agree that this does result in a higher ultimate claims reserve for the more recent accident years. However, would this also not have an impact on claims incurred? Claims incurred = Claims Paid + Case estimates. If claims paid are settled more quickly then would this pattern not also be seen in claims incurred? Or are we saying that it is only the payment that is sped up not the rate at which the claims are incurred and hence the claims incurred pattern would remain the same as the case estimates would fall in order to compensate for the higher claims paid (in early development periods)
Hi In this scenario, both triangles are not likely to result in an unbiased estimate of the ultimate claims. The difference between the two results needs to be explained so that you can find out your next steps as you work to get an unbiased estimate.
