Friedland05.Triangles
Reading: Friedland, J.F., Estimating Unpaid Claims Using Basic Techniques, Casualty Actuarial Society, Third Version, July 2010. The Appendices are excluded.
Chapter 5: The Development Triangle
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Study Tips
A loss development triangle, or just triangle for short, is a fundamental concept in both pricing and reserving. Here are 4 things you must know:
- what does a loss development triangle look like
- what information does it give you
- how do you construct a triangle from raw claims data
- how do you use a triangle to estimate ultimate losses
We cover #1,2,3 in this chapter. Point #4 is what most of the rest of the Friedland text is about. There are many methods for estimating ultimate losses (or claims) starting with development triangles. Certain methods work better than others in different situations.
We're going to plow through this chapter at high speed. You'll get lots of practice working with triangles in all of the remaining chapters.
Estimated study time: 1 day
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.Fall #16) E (2015.Fall #16) E (2015.Spring #15) E (2014.Fall #14) E (2013.Fall #14)
In Plain English!
Here's a development triangle. What does it mean?
AY
The row labels are Accident Years. ← put this label in the table
Look at the first row:
