Incurred Loss Development Method: Step 3
- 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. Remaining unknown losses (bold type) in first
table are determined using the known losses and the average ratios. Colors show
how known losses multiplied by the average ratio determines unknown losses
(bold). Remaining unknown losses (black bold type) are detemined in the same
way.
|
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 |
87,500 |
| 1986 |
51,799 |
68,175 |
69,802 |
69,694 |
70,041 |
70,461 |
70,531 |
| 1987 |
40,143 |
67,978 |
75,144 |
77,947 |
79,896 |
80,375 |
80,857 |
| 1988 |
55,665 |
80,296 |
87,961 |
89,368 |
91,602 |
92,152 |
92,224 |
| 1989 |
43,401 |
57,547 |
61,115 |
62,093 |
63,645 |
64,027 |
64,091 |
| 1990 |
28,800 |
39,859 |
42,330 |
43,007 |
44,082 |
44,346 |
44,390 |
|
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 |
Return to "Methods"
Copyright © 1996, 1997 Maher Associates, Inc.
Last modified: July 12,
1997