Incurred Loss Development Method: Step 2
- Establish aging ratios based on known incurred losses for each year of
coverage.
- Calculate the average ratio for each period
- Use average ratio to project ultimate incurred loss on all written
insurance.
|
Months of
Development |
|
| Accident Year |
12 |
24 |
36 |
48 |
60 |
72 |
84 |
|
| 1984 |
58,641 |
74,804 |
77,323 |
77,890 |
80,728 |
82,280 |
82,372 |
|
| 1985 |
63,732 |
79,512 |
83,680 |
85,366 |
88,152 |
87,413 |
|
|
| 1986 |
51,799 |
68,175 |
69,802 |
69,694 |
70,041 |
|
|
|
| 1987 |
40,143 |
67,978 |
75,144 |
77,947 |
|
|
|
|
| 1988 |
55,665 |
80,296 |
87,961 |
|
|
|
|
|
| 1989 |
43,401 |
57,547 |
|
|
|
|
|
|
| 1990 |
28,800 |
|
|
|
|
|
|
|
|
Time To Time Ratios |
| Accident Year |
12:24 |
24:36 |
36:48 |
48:60 |
60:72 |
72:84 |
84:Ultimate |
| 1984 |
1.276 |
1.034 |
1.007 |
1.036 |
1.019 |
1.001 |
|
| 1985 |
1.248 |
1.052 |
1.020 |
1.033 |
0.992 |
|
|
| 1986 |
1.317 |
1.024 |
0.998 |
1.005 |
|
|
|
| 1987 |
1.693 |
1.105 |
1.037 |
|
|
|
|
| 1988 |
1.443 |
1.095 |
|
|
|
|
|
| 1989 |
1.326 |
|
|
|
|
|
|
| 1990 |
|
|
|
|
|
|
|
| Average |
1.384 |
1.062 |
1.016 |
1.025 |
1.006 |
1.001 |
1.000 |
Go to STEP 3
Copyright © 1996, 1997 Maher Associates, Inc.
Last modified: July 12,
1997