Difference between revisions of "Friedland08.ExpectedClms"
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==In Plain English!== | ==In Plain English!== | ||
| − | Let' | + | 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% | : '''ECR''' = 75% | ||
| Line 64: | Line 68: | ||
Then by the ECR method: | Then by the ECR method: | ||
| − | : '''ultimate | + | : '''ultimate claims''' = ECR x EP = 75% x 1,000 = <u>750</u> |
| + | |||
| + | 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. | ||
==POP QUIZ ANSWERS== | ==POP QUIZ ANSWERS== | ||
Revision as of 20:14, 24 April 2020
Pop Quiz
Study Tips
BattleTable
Based on past exams, the main things you need to know (in rough order of importance) are:
- fact A...
- fact B...
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.
