Can anyone help me better understand the logic behind the determination of the frequency and severity in the last part of this question. I obviously agree with the need to adjust the frequency and severity of the data - I simply do not follow the logic shown in the examiner's report.
yes - tricky to follow what's going on! All I can think of (and I haven't confirmed this with the examiners) is that they want to allow for the fact that the large claim limit has not changed, and so you would expect to see more claims of lesser amounts hitting this definition over time. They've upped the frequency and lowered the severity (in a rough and ready way) as a result. Personally, I think I would have left them all the same (which I'd hope would also have scored marks, as long as I stated what I was assuming).
