Spring 2013 Q7
Why are the benefit level changes applied to all years? For example, I thought the benefit change having an impact of +5% was only for losses from accident year 2011 (July) and onwards so I only applied that adjustment to AY 2011.
Comments
The reason the benefit changes have to be applied to all years is that the given ultimate losses are all given at the old benefit levels. Apparently when their actuary estimated the ultimate losses, they did everything at the old benefit levels so you have to bring everything up to the new levels.
Side note: Sometimes problems like this give you the data prior to the benefit change at the old benefit levels but give you the newer data at the new benefit levels. In that situation, you would not have to apply the change to all years. You would only apply the change to the data before the benefit level changes if you want to use that data in a rate indication.