In Box 11.2, we have seen that in the standard chain ladder method, the weighted average is normally used to calculate the average development ratios between two successive development years.

a. Produce a definition of the average development ratios as a simple average.

b. Calculate the average development ratios for the claims development triangle of Figure 11.10 according to this definition.

c. What do you think is the main disadvantage of the simple average method?

d. Produce an example in which this disadvantage would have great effect on the final projection results.

e. How could the simple average definition be amended to overcome this disadvantage?