Hi Can anyone explain how the first sentence of the solution was deduced? I dont see the link between the question and the answer. Thanks
Dear Jensen, The question states that the ratio of paid/incurred claims is decreasing. This suggests that claims are being paid more slowly than they used to be. However, it will take time for this to be reflected in the basic chain ladder profile. This leads us to the first line of the solution, which states that the "actual claims development is slower than that suggested by the use of the basic chain ladder." I hope this helps. Kind regards, Katherine.
