Friedland08.ExpectedClms

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 method	Friedland07.Development	Friedland09.BornFerg
E (2015.Fall #17)	Friedland07.Development	ultimate claims: - expected claims method
E (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.