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claims data

N

NeedToQualify

Member
Hi,

Can you please help me with the following question?

In Q&A Bank Q3.10 (ii) we have some historical data by policy issue month. The solution treats the "amount of claim payments" as if they were paid in the middle of each month. This assumption seems very wrong to me.

I assume that the "amount of claim payments" refers to payments made to date (year end), so if annual policies were written on average in the middle of each month then average payment dates for each origin (underwriting) month should be the average date between the middle of the origin month and end of the year.

Thanks
 
NeedToQualify said:
I assume that the "amount of claim payments" refers to payments made to date (year end),
Click to expand...

No, the way I read the table is that it's the amount of claim payments in that calendar month, not in the year to date. Just because the numbers in that column are increasing, doesn't mean they're cumulative! You've been given the total in the year to date in the bottom row.
 
Thanks for the answer.

I get this problem when calculating the investment income.

I'm not treating the claim payments as cumulative, but as payments made to date with respect to each underwriting month.

e.g. the July payments refer to policies issued in July, but the payments could be made in any development month in the year. The investment income calculation assumes that the payments were made in development month zero.

Also I think the only way to identify whether numbers refer to calendar months or underwriting months is the fact that the o/s are not cumulative.

I'm I getting this very wrong?

P.S. Shouldn't we also be calculating a claims handling reserve?
 
Last edited by a moderator:
The payments shown are meant to be the payments in that calendar month, eg the July payments refer to claims paid in July. Perhaps it would be clearer if the question said 'month' in the table rather than 'month of issue'.

The claims handling expenses are included in the expenses figure rather than the claims figure.
 
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