Hi,
In the notes when discussing the effects of claims inflation on ILFs the resulting formula is given assuming an inflation of a% affects the loss distribution uniformly been time t and t':
ILFt'(x) = ILFt(x/1+a)/ILFt(b/1+a)
Please could you explain how the above is derived from the basic ILF equation below (including underlying assumptions):
ILFt(x) = LEVx(x)/LEVx(b)
Many thanks,
Leo
Last edited: Jun 13, 2023