Excess (Deficiency) Problems
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Problem 1: Calculate and interpret the excess (deficiency).
undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior $100 paid during CY 2022 for AYs 2021 & prior $30 undiscounted liabilities at Dec 31, 2022 for AYs 2021 & prior $70
- excess (deficiency)
- = 100 - 30 - 70
- = 0
- → there is neither an excess nor a deficiency - the actuary's prior estimate of the liabilities was accurate (as measured against the latest available information)
Problem 2: Calculate and interpret the excess (deficiency).
undiscounted liabilities at Dec 31, 2021 for AYs 2021 & prior $100 paid during CY 2022 for AYs 2021 & prior $30 undiscounted liabilities at Dec 31, 2022 for AYs 2021 & prior $73
- excess (deficiency)
- = 100 - 30 - 73
- = -3
- → the actuary's prior estimate of the liabilities was deficient by $3 (as measured against the latest available information)