Difference between revisions of "Friedland08.ExpectedClms"
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==In Plain English!== | ==In Plain English!== | ||
| − | Recall that LR normally stands for Loss Ratio, and that this is the same things as CR or Claims Ratio. | + | Recall that LR normally stands for Loss Ratio, and that this is the same things as CR or Claims Ratio. Let '''ECR''' stand for Expected Claims Ratio |
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ECR is a projection, or an ''expectation'' of what the loss ratio or claims ratio is going to be in a future period. Let's start with the simplest possible example you could imagine of the ECR method. Suppose you're given: | ECR is a projection, or an ''expectation'' of what the loss ratio or claims ratio is going to be in a future period. Let's start with the simplest possible example you could imagine of the ECR method. Suppose you're given: | ||
Revision as of 20:15, 24 April 2020
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Based on past exams, the main things you need to know (in rough order of importance) are:
- fact A...
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reference part (a) part (b) part (c) part (d) E (2016.Spring #16) unpaid claims:
- expected claims methodFriedland07.Development Friedland09.BornFerg E (2015.Fall #17) Friedland07.Development ultimate claims:
- expected claims methodE (2015.Spring #18) E (2014.Fall #15) E (2014.Spring #19)
In Plain English!
Recall that LR normally stands for Loss Ratio, and that this is the same things as CR or Claims Ratio. Let ECR stand for Expected Claims Ratio
ECR is a projection, or an expectation of what the loss ratio or claims ratio is going to be in a future period. Let's start with the simplest possible example you could imagine of the ECR method. Suppose you're given:
- ECR = 75%
- EP = 1,000
Then by the ECR method:
- ultimate claims = ECR x EP = 75% x 1,000 = 750
To say this in words, if you think the ultimate claims ratio for a particular year is going to be 75%, and you also know the EP is 1,000, then the ultimate claims in dollars is just the product of ECR and EP.
