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Sept 2007 Qn3v

G

gracelimhz

Member
Hi, I'd like to check why the assumed paid claims are at 25%. I understand that the mean term of paid is 4 years, however it's now Dec 2006 and most of the 2000 - 2002 claims will be paid. If that's the case, paid claims should be greater than 25% of ultimate claims from 2000 - 2004?
 
Hi,

Yes, I think the paid claim proportion probably would have been more than 25%. However, it's only a rough-and-ready assumption in order to show that the difference is not material. If it's not material for 25% then it certainly won't be for higher paid proportions, so it does at least prove the point.

As long as you took some account of the paid claims, you would have picked up the marks by using a different percentage so don't worry about it too much.

Coralie
 
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