Powerpack Station 3 - Problem 5

Comments

• Graham

  October 2021

  Hi Chatterjee,

  Is this what you're looking for:

  • https://www.battleacts5.ca/wiki5/Friedland10.CapeCod#Review_of_Methods_Through_Chapter_10
• agnichat

  October 2021

  Why yes, it was. Thank you.

  
  

  Follow up:

  • Is Settlement Rate = Disposal Rate?
• Graham

  October 2021 edited October 2021

  The short answer is yes: Settlement Rate and Disposal Rate refer to the same concept.

  A more nuanced answer is this:

  • I use the term "settlement rate" in a more general way to describe how quickly the claims department is moving claims through the system. I don't think I actually gave a mathematical definition, but you could say it's the average number of months between report and settlement. For example, it might take 9.5 months on average. Then if the company hires more claims adjusters, this may decrease to 8.5 months the following year.
  • Now, claims disposal rate (CDR) has a mathematical definition and this appears in Chapter 13 of Friedland when we cover the Berquist-Sherman paid method. The definition is:
  • ==> CDR = CPC / UC
  • ==> where CPC = Cumulative Paid Counts, and UC = Ultimate Counts.
  • So in my own mind, I think of the settlement rate as a time-value (months) and the claims disposal rate is a percentage. But for this exam, if you want to investigate the settlement rate you would generally use the CDR.
  • You can get to the definition of CDR here: https://www.battleacts5.ca/wiki5/Friedland13.BerqSherm#Berquist-Sherman_Paid_Method
  • (Actually, the first time CDR comes up is here in Chapter 11: https://www.battleacts5.ca/wiki5/Friedland11.FreqSev#Example_D:_Method_.233_-_Disposal_Rate_Method)