Hi, Can someone help to explain the differences between case estimate development factor and incurred development factor? I am guessing incurred development factor includes both paid development factor (for paid part of claims) and case estimate development factor (for the estimated unpaid part of incurred claims)?
Where have you seen the phrase 'case estimate development factor' used? In context, it might make more sense. Development factors can be year-on-year or factors to ultimate. You would normally have development factors based on either paid or incurred (paid plus outstanding) claims triangles. Just a thought: I don't suppose you may have interpreted 'cdf' and 'idf' wrongly? The 'c' and 'i' in these stand for cumulative and incremental, not case and incurred.
Hi, I found it under Chapter 14, under Frequency-severity method - in developing claims to ultimate level.
Ah, right. This is quite a specific application of development factors. The 'case estimate development factors' are being used to develop open claims only. The 'normal' incurred development factors (used in standard chain ladders) are the ones I've described above, and operate on triangles that contain data on both open and closed claims. There's an example on the bottom of page 14 of chapter 14.
