02-26-2012, 12:42 AM
IN PAGE 301 OF WERNER, regarding the loss trend. I thought both trend from and trend to in this example is by PY. Therefore, looking at experience period PY 7/1/03-04, the ave loss date is 7/1/04, and for the trend to period, which is also an annual policy effective 7/1/2009, the ave loss date is 7/1/2010, right?
while in page 301, it said the ave accident date of trend to period is 12/31/2009, similarly, all the trend from period, the ave accident date is 12/31. How come?
also when ever after trending, and you need to apply the LDF, which LDF to use. For example in the above example, for PY 7/1/03-04, after trending for 7/1/2009-2010 period, which LDF you use, how did the example comes up with the LDF of 66 to ultimate?

Thanks in advance.

tommie frazier
02-26-2012, 01:31 AM
don't have the book. is the ldf based on PY triangles or AY triangles? there may be a shift in there that you missed.

Vorian Atreides
02-26-2012, 09:21 PM
Keep in mind that calculating "average dates" for a portfolio of risks (like what was done in Chapter 6 on losses) and calculating this date for a single policy are different.

In the former case, you essentially identify a "typical policy" (one with the average written date for the effective date) and determine the mid-point of the term of that policy.

In the latter, the mid-point of the term of the policy is the average accident date. Also, when considering the pricing of a single policy (as is the case for many large commercial policies), method of aggregation for premium and losses is essentially PY (no reason to do otherwise).