Fall 2016 Q4 a)

judyohjudyoh
in W-06-LossLAE
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When I calculated the frequency trends and saw 0.9, 0.9, 1.012, 1.095, I originally thought that I should use a 2 step trend with losses prior to Jan 1 2014 having a -10% frequency trend and any losses after Jan 1 2014 having a 0% frequency trend. Why is this not the case here? Because 2014 and 2015 start their period after Jan 1 2014, I had a 0% frequency trend for those years but for 2013, I applied a -10% frequency trend in step 1 and 0% in step 2.

Also, why is frequency trend taking an average from AY 2013-2015? It says it is given the change in AY 2013 and forward but it looks like the frequency trend changes at AY 2014 (2013-2014).

Comments

  • GrahamGraham

    You're right that the change in frequency from 2011 to 2013 is -10%, and then flat after that but the question only asks you to trend AY 2013, 2014, 2015, which is AFTER the frequency stabilized at about 0%.

    I don't see any significant change in the frequency starting in 2013. The values provided:

    • 0.81, 0.82, 0.80

    are essentially the same so I would have selected a frequency trend of 0%.

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