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CM2-19: run-off triangles page 27

S

Sunseeker

Made first post
Why do we calculate the outstanding claims using the original figures from Figure 1 instead of the inflation-adjusted figures from Figure 9? The incremental outstanding claims are obtained from Figure 9. If we accumulate using the original figures from Figure 1, inflation is not reflected in the historical claims, which seems inconsistent with the first step where we retrieve the outstanding claims from the inflation-adjusted historical claims triangle.
 
I see what you mean. Past claims are adjusted for inflation in order to calculate more appropriate Development Factors - that's all.
When calculating the reserve required for outstanding claims, it's only the data from the long trailing diagonal from Figure 1 that's used. These figures represent the nominal amounts of claims paid, and at this point is doesn't matter when they were paid. For example, if I calculate the total cumulative claims for a particular accident year to be 1,000 and I've already paid out 100 in respect of that year - the outstanding claims are 900, irrespective of when those past claims were paid.
 
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