There are some few conclusions in the answer which I don't agree on: 1. The effects between other cells would probably be quite marginal (ie deferrals from 2018/1 to 2018/2 should be relatively minor). 2. For the reserving as at 31 December 2020, the main effect will be a small overstatement of the 0 to 1 development factor, and hence a slight overstatement of the reserves for the 2020 origin From my view: this is the triangle before and after (which x is the normal paid/ incurred claim in each cell), before and after the strike In 2019, claim reported, claim paid all decrease, and 2020 all increase, affecting the diagonal 2019/0, 2018/1.... and diagonal 2020/0, 2019/1... So when doing weighted development factor calculation, 3/2 will be affected the most, and 1/0 affected the least. So conclusion that 2018/1, 2018/2 is marginal is not correct. 3/2 would be the most affected development factor not 1/0 Thanks very much for your reading and explanation.
Don't forget the basic chain ladder method is applied to cumulative and not incremental claims triangles. I think your examples above are based on the impact on the incremental and not the cumulative triangle. Have another think about what the impact will be on the development factors calculated on the cumulative triangle.
Thanks for your feedback. With cumulative triangle, it will look like this: Where: 1/0 and 2/1: Denominator and numerator both decrease, making the affect minimize 3/2: Denominator decrease, where numerator stay the same, making the affect increase more. Therefore, the overstatement is at all accident year origin, because of 3/2 development factor. Please let me know your thought?
I can see what you're trying to do, but I think you've oversimplifiying. A better technique would be to think about: the effect on occurrence dates / reporting dates / settlement dates when you expect the Nov/Dec claims to settle (with and without the postal strike) the effect on other claims each origin year separately - eg household business is pretty short-tailed, so the effect on 2018 is likely to be minimal whether you expect to over- or underestimate your reserves. This is the approach taken by the ActEd solutions.
This is an important skill for you to develop yourself Minh. By analysing a solution closely, you will be better able to pick up marks in a future question. The solution is not long, I would urge you to have a go yourself. Look at the first sentence of the marking scheme... does it fit into one of the bullet points I have outlined above? What about the second sentence... which bullet point does it fit into? And so on.
