Hello. If you are referring to the chain ladder method, I have a series of videos starting with this one: ruclips.net/video/17ocqFbSw0I/видео.html I call it the loss development method in this video series.
Thats's a Great Video! may i ask some question? 1. what the formula for initial expected ultimate loss for Bornhuetter-Ferguson Method? 2. if we don't have a case reserve data, is it another way to obtain case reserve data from loss triangle (Run-Off Triangle)? Thank you in advance
Hi Hafidh, thanks for the feedback! 1. There is no formula, per se, for the Initial Ultimate Loss. The interesting thing about the BF method is that the user needs to begin with an ultimate loss assumption. The method itself is really just an allocation technique. A common approach to determine an Initial Ultimate Loss is to analyze the experience of more mature recent accident years relative to an exposure base to determine a loss rate. This rate can be applied to the exposure base of more recent accident years. It is necessary make adjustments for inflation and any trends that may impact either the historical losses or exposure base. Here is a good paper that describes several methods for determining the Initial Ultimate Loss: www.casact.org/sites/default/files/2021-02/01b-initial-expected-loss-ratio-working-party-paper.pdf 2. If you do not have case reserve data, it may be possible to calculate if you have both paid and incurred loss using the formula: Case reserves = Incurred Loss - Paid Loss. (Note: incurred loss may be called "reported loss" or case incurred loss".) Hope this helps!
Awesome.. thank you so much
You're welcome, thanks for the feedback!
Is there any difference between incurred loss development method and incurred cost development method?
Hi Emily. I am not familiar with the latter method, but they sound like they may be the same.
do you have video on CL method
Hello. If you are referring to the chain ladder method, I have a series of videos starting with this one: ruclips.net/video/17ocqFbSw0I/видео.html
I call it the loss development method in this video series.
Thats's a Great Video!
may i ask some question?
1. what the formula for initial expected ultimate loss for Bornhuetter-Ferguson Method?
2. if we don't have a case reserve data, is it another way to obtain case reserve data from loss triangle (Run-Off Triangle)?
Thank you in advance
Hi Hafidh, thanks for the feedback!
1. There is no formula, per se, for the Initial Ultimate Loss. The interesting thing about the BF method is that the user needs to begin with an ultimate loss assumption. The method itself is really just an allocation technique. A common approach to determine an Initial Ultimate Loss is to analyze the experience of more mature recent accident years relative to an exposure base to determine a loss rate. This rate can be applied to the exposure base of more recent accident years. It is necessary make adjustments for inflation and any trends that may impact either the historical losses or exposure base. Here is a good paper that describes several methods for determining the Initial Ultimate Loss: www.casact.org/sites/default/files/2021-02/01b-initial-expected-loss-ratio-working-party-paper.pdf
2. If you do not have case reserve data, it may be possible to calculate if you have both paid and incurred loss using the formula: Case reserves = Incurred Loss - Paid Loss. (Note: incurred loss may be called "reported loss" or case incurred loss".)
Hope this helps!