Hi Im a bit stuck on this question when it comes to the IBNR calculation - part ii. The recalculation for currency is fine. We then do paid plus outstanding triangles = reported claims Then, IBNR seems to be -> reported projected to ultimate less reported to date. On an underwriting year basis, a lot of the premium on the most recent origin period will be unearned. So there could still be some claims which have not yet occurred today but will occur in the future - if today is the end of development year 1 as in the question. This assumes say all policies are written not on 1st Jan. These wont be IBNR as they havent yet occured As a result of this if we do ultimate less reported the difference will include IBNR and claims which have not yet occured wont it? Not just IBNR? Im confused
You're right of course, projecting an UW year triangle will give an estimate of IBNER + IBNR + claims that haven't yet happened. We can't find an estimate for IBNR only. Therefore, by convention, when using UW year triangles, we call "ultimate - reported to date" the IBNR, even though, as you correctly say, the figure will actually include other elements as well. (Note that it doesn't make sense to talk about earned premium, or UPR, or URR for an underwriting year basis at all.)
The exchange rates on outstanding claims are applicable at the time the claim was reported. This model solutions assumed that all claims outstanding as at end of 2009 were reported in 2009 irrespective of their underwriting year. Wouldn't it have been a safer assumption that part of the
I'm not exactly sure what your question was going to be here as it ended abruptly, but in essence we are not told in the question whether the outstanding claims at the end of 2009 and 2010 (for the 2007 and 2008 underwriting years) have been updated to reflect the current estimate of the case reserves or not. Assuming that they have, then it is reasonable to assume that they have had the latest exchange rates applied to them. This is effectively what the solution assumes. However, in practice if you had assumed something different, written that assumption down and carried out the calculations correctly in accordance with that assumption, you should get the credit for it.
(talking of abrupt endings to comments, I've noticed that whenever the GBP symbol is used in a post the remainder of the post is removed)
maz1987 I think that is a problem to do with the user's settings: please see the attached for more info: http://www.vbulletin.com/forum/foru...-troubleshooting/276619-character-set-problem
Katherine, can you please elaborate why it doesn't make sense to talk about earned premium, or UPR, or URR for an underwriting year basis at all? Thanks
With underwriting year accounts we focus on the premiums written in a given year and not those earned. We are interested in the eventual outturn of the underwriting year in question and do not worry about the distinction as to whether or not the exposure is earned or unearned. We reserve for all claims together and therefore do not need to hold a separate UPR or AURR. See Section 3 of Chapter 24 for more details.
