ST8 2010 specimen paper Q7 - burn cost calc

Discussion in 'SP8' started by mattt78, Sep 21, 2011.

  1. mattt78

    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:
     
    mattt78, Sep 21, 2011
    #1
  2. Duncan Brydon

    Duncan Brydon ActEd Tutor Staff Member

    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.
     
    Last edited: Sep 22, 2011
    Duncan Brydon, Sep 22, 2011
    #2

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