The table below (Case 1) shows the number of employers’ liability losses reported to an organisation over the period 2017 to 2024, and the relevant exposure over the same period. Some IBNR factors, based on portfolio estimates, are also provided.

a. Based on these figures, advise on a frequency model for the number of losses in 2025, for which you also have been given an estimated exposure, and calibrate the model as needed. State all assumptions and approximations you make.

b. Explain how your advice would change if the number of claims reported were as in Case 2.

Case 1 Case 2 Policy year Number of employees Number of claims reported

(non-zero)

Factor to ultimate Number of claims reported

(non-zero)

Factor to ultimate 2017 51,500 174 1.000 183 1.000 2018 55,400 182 1.000 202 1.000 2019 69,800 211 1.001 221 1.001 2020 66,100 226 1.005 226 1.005 2021 64,100 184 1.022 235 1.022 2022 62,800 242 1.083 212 1.083 2023 69,400 209 1.257 205 1.257 2024 66,200 51 3.702 65 3.702 2025 (estimate) 65,400