2018.Fall #16 K (IBNR)

sidsimsidsim
in CCIR.ARinstr

In your solution to K, you mention that IBNR = Ultimate - Case. Shouldn't it be Total APV Liabilities - Case? Since Total APV Liabilities = IBNR + UCAE. And if we wanted to use Ultimate, we would want to subtract Paid losses as well, because Ultimate = Paid + Case + IBNR?

I generally find it confusing that UCAE doesn't mean all of unpaid losses, which in my mind should include both IBNR and Case, but instead it means just the Case Reserve. Unless I completely misunderstood this problem...

Comments

  • grahamgraham

    Sorry, that was a typo. The formula for K should indeed have been:

    • IBNR = (net APV) - (net Case)

    You can also write (net Case) as (net UCAE). I suppose it is a bit confusing that UCAE includes only case reserves and not IBNR. (If you take the term "unpaid" literally, it seems like it should include both.)

    I will correct this in the exhibit. I also noticed I said the value of 4,816 comes from Step 3a when it should have been Step 3b.

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