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ST8 2010 specimen paper Q7 - burn cost calc

M

mattt78

Member
This question asks you to calculate a premium for a motor fleet policy, and provides data for both inflation and IBNR/IBNER development.

The solution makes adjustments for inflation, but ignores the IBNR/IBNER development patterns provided.

Does anyone know why the solution doesn't develop these claims to ultimate when calculating the burn cost?

I know you can calculate burn costs with or without IBNR/IBNER development, but why would you not make these developments when the data is available?!

Any thoughts much appreciated :cool:
 
The results of development are shown in the first table of the solution. For example, the projected third party personal injury costs for accident year 2009 are £67k. This is found by taking the reported incurred claims of £20k for accident year 2009 given in the question and dividing by 0.3 (because they are 30% developed according to the development table in the question).

Hope this helps. Good luck.
 
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