Question
Use the claim history data below to answer the questions below. Assume all claims are paid by the end of the 3rd year following the
Use the claim history data below to answer the questions below. Assume all claims are paid by
the end of the 3rd year following the accident year (so, for example, there will be no further paid
claims for the 2017 Accident Year after 2020).
Accident Cumulative PAID claims history through end of:
Year 2017 2018 2019 2020
2017
200 450 1000 1100
2018
150 350 1200
2019
300 750
2020
250
Consider which format is shown here and how to format for analysis. This is the format used
more often by health actuaries.
a. (5 points) What was the total amount of claims payments during 2019?
b. (5 points) What is the 2nd to 3rd period link ratio for the 2017 accident year?
c. (5 points) What is the estimate of ultimate loss for accident year 2019?
d. (25 points) Assuming these are the only paid claims (i.e., the company did not exist
before 2017), use the paid development method discussed in class to determine the loss
reserves at the end of 2020 for each accident year and in total for all accident years
combined.
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