Difference between revisions of "Friedland09.BornFerg"
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===Example A: Intro to BF Method=== | ===Example A: Intro to BF Method=== | ||
| − | Calculate the ultimate for AY 2023 | + | Calculate the ultimate for AY 2023 using the reported Bornhuetter-Ferguson method. The following information is as of Dec 31, 2023: |
:{| class='wikitable' | :{| class='wikitable' | ||
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|| EP || 1,000 | || EP || 1,000 | ||
|- | |- | ||
| − | || ECR || | + | || ECR || 65% |
|- | |- | ||
|| reported claims<sub>12</sub> || 375 | || reported claims<sub>12</sub> || 375 | ||
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|| reported CDF<sub>12→ult</sub> || 2.0 | || reported CDF<sub>12→ult</sub> || 2.0 | ||
|} | |} | ||
| + | |||
| + | First, note how easy it is to calculate the ultimate using the reported development method: | ||
| + | |||
| + | * 375 x 2.0 = <u>750</u>. | ||
| + | |||
| + | And the ultimate for the ECR method is equally easy: | ||
| + | |||
| + | * 65% x 1,000 = <u>650</u> | ||
| + | |||
Revision as of 18:44, 2 July 2020
Reading: Friedland, J.F., Estimating Unpaid Claims Using Basic Techniques, Casualty Actuarial Society, Third Version, July 2010. The Appendices are excluded.
Chapter 9: Bornhuetter-Ferguson Method
Contents
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 (2019.Spring #17) ultimate:
- reported B-Fultimate:
- reported B-Fcombining data:
- argument againstE (2019.Spring #19) Friedland07.Development ultimate:
- reported B-F (tort reform)E (2018.Spring #17) E (2018.Spring #19) E (2017.Spring #18) Friedland08.ExpectedClms unpaid & IBNR:
- reported B-FE (2016.Fall #21) IBNR:
- B-F methodECR assumption:
- assess reasonablenessalternate method:
- recommend & justifyE (2016.Spring #16) Friedland08.ExpectedClms Friedland07.Development ultimate:
- paid B-FE (2015.Fall #18) ultimate:
- reported B-FCDFs < 1.0:
- does B-F still work?E (2015.Spring #19) ultimate:
- reported B-Fselected ultimates:
- discuss appropriatenessultimate:
- Benktanderunpaid:
- explain Benktander iterationsE (2014.Fall #18) IBNR:
- Benktandercredibility weighting:
- explain BenktanderE (2014.Spring #14) ultimate:
- reported B-Frptd B-F vs rptd dvlpt:
- situations where equalrptd B-F vs rptd dvlpt:
- situations B-F is betterE (2013.Fall #17) unpaid:
- Benktanderunpaid:
- Benktander 1000 iterationsE (2013.Spring #4) ultimate:
- reported B-FE (2013.Spring #18) key assumption:
- B-F methodcredibility-weighting:
- explain for B-Fcredibility-weighting:
- violation of assumption(d) paid vs rptd B-F for rising LRs
(e) B-F vs Cape Cod
In Plain English!
Example A: Intro to BF Method
Calculate the ultimate for AY 2023 using the reported Bornhuetter-Ferguson method. The following information is as of Dec 31, 2023:
EP 1,000 ECR 65% reported claims12 375 reported CDF12→ult 2.0
First, note how easy it is to calculate the ultimate using the reported development method:
- 375 x 2.0 = 750.
And the ultimate for the ECR method is equally easy:
- 65% x 1,000 = 650
(There's also a paid version of BF and it works exactly like the reported version.)
