ch12 doubts

There's only one doubt I have from this chapter.

For case o/s method #2 we use industry paid/reported factors to derive the given formula. We know that industry's paid and reported factors do allow for IBNYR in general along with the IBNER component.

Also, if we derive the formula for this method in %paid and %reported terms instead of CDFs we get the following-

Unpaid claims= Case*[ 1+( %unreported)/(%reported-%paid) ] which further drills down to

= Case + Case*[ (%unreported)/(% in case reserves) ]

Here, %unreported must only be the IBNER component for the formula to work and amount for unpaid claims to make sense (and thus exclude IBNYR to avoid discrepancy between numerator and denominator).

So, in conclusion, either the assumptions, advantages and disadvantages for method #1, all should also hold for method #2 or this method (and the formula) is technically wrong if it contains IBNYR becasue industry CDFs contain it.

Which one sounds more appropriate?

Thanks