What is the condition for an effective price floor.

(7 points ) You are given the following triangle of cumulative reported losses: Months of Development Accident Year 12 24 36 2014 8,000 9,500 10.000 2015 4,000 6,000 2016 6,000 You apply Clark's stochastic reserving model using the LDF method and a loglogistic distribution with cumulative distribution function G(x) = (1" + 0" ) - where x is in months. The maximum likelihood estimates of @ and & are 1.1736 and 3.0544, respectively. (a) (/ point) Explain why no truncation adjustment is necessary. (b) (1.5 points) Calculate the aggregate IBNR reserve for accident years 2014 to 2016. The estimate of o- is 647. (c) (2.5 points) Verify the calculation of the estimate of o'. (d) (0.5 points) Calculate the process standard deviation of the aggregate IBNR reserve. You have plotted the following normalized residuals: Normalized Residual 34 Development Month (e) (0.5 points) Verify that the normalized residual for accident year 2015 at 24 months is 0.69