I just need clarification on how a particular step works with this method.
I have two questions:
1) What exactly is a grossing-up factor?
2) In the online classroom video for average cost per claim reserving, at around 5:30, the video shows taking the grossing-up factor from accident year 2004, development year 1 and using exactly the same grossing-up factor for accident year 2005, development year 2. Why does it do this? The video seems to just do it, but not really explain why. Going through the core reading didn't shed much light on this, either. Could you please clarify?
Thanks!
I have two questions:
1) What exactly is a grossing-up factor?
2) In the online classroom video for average cost per claim reserving, at around 5:30, the video shows taking the grossing-up factor from accident year 2004, development year 1 and using exactly the same grossing-up factor for accident year 2005, development year 2. Why does it do this? The video seems to just do it, but not really explain why. Going through the core reading didn't shed much light on this, either. Could you please clarify?
Thanks!