Organizing Uncertainty does not eliminate it
Product Demonstration
Overview. In this section we provide a demonstration for a Sample
Insurance Company writing a single line of business.
The objective is to produce an empirical frequency distribution of all possible outcomes of
ultimate
incurred losses (or, equivalently, the IBNR, incurred but not
reported losses) that are produced by the
application of the loss development method using only observed
LDFs.
The input triangle is shown and various outputs are displayed.
The reference to all possible outcomes that the loss development method yields means that the loss development data is used 'as is', making no explicit assumptions, and accepting at face the assumptions that are implicitly contained in the data arrays of the Sample Insurance Company. The user can specify the use of either weighted or unweighted LDF's.
Output for a Single Line of Business. The tabular distribution is provided for both the frequency distribution as well as the cumulative frequency distribution. Click on the 'Distributions' button to view the results. In addition the graphs of the respective frequency distributions are provided. To view the results, click on 'Graphs' button to view the Graph of the Frequency Distributions and the Graph of the Cumulative Frequency Distribution.
© Bass & Khury 2009. All Rights Reserved.
The reference to all possible outcomes that the loss development method yields means that the loss development data is used 'as is', making no explicit assumptions, and accepting at face the assumptions that are implicitly contained in the data arrays of the Sample Insurance Company. The user can specify the use of either weighted or unweighted LDF's.
Output for a Single Line of Business. The tabular distribution is provided for both the frequency distribution as well as the cumulative frequency distribution. Click on the 'Distributions' button to view the results. In addition the graphs of the respective frequency distributions are provided. To view the results, click on 'Graphs' button to view the Graph of the Frequency Distributions and the Graph of the Cumulative Frequency Distribution.
Sample Insurance Company
© Bass & Khury 2009. All Rights Reserved.
Input. The input consists of the loss development history for
the accident years 1995-2005 for a medical malpractice book of business. The loss development history is provided at twelve-month intervals.
Although reported loss development history is used in this demonstration, paid loss development history may be used just as easily. More generally, many types of data may be used. In this sample the user has specified weighted LDF's in light of the rapid growth in the more recent years. To view the input, click on the "Input" button below.
Sample Insurance Company
Although reported loss development history is used in this demonstration, paid loss development history may be used just as easily. More generally, many types of data may be used. In this sample the user has specified weighted LDF's in light of the rapid growth in the more recent years. To view the input, click on the "Input" button below.
Sample Insurance Company