Individual Risk Rating, Text Page 169-170 & 165

[Ruby]

Individual Risk Rating, Text Page 169-170 & 165 describes:

A= Actual losses & ALAE limited by B/L and MSL = Proj Ult Losses & ALAE limited by B/L & MSL =Reported Losses & ALAE limited by B/L & MSL + Expected Unreported Losses & ALAE limited by B/L & MSL

Now Consider , Q32, 1998 Exam from All10 & CSM Manuals:

Given “Actual B/L loss & ALAE” = 30,000.

In the solution of the problem, the expression for “Actual Loss ratio” is given
in All10 & CSM as:

ALR= (30,000+Expected Unreported Loss)/Subject Premium

By seeing the above expression its apparent that:
30,000 is taken as “Reported Loss & ALAE limited by B/L & MSL” and NOT as “Proj Ult Losses & ALAE limited by B/L & MSL”

So my question is:

What are Actual B/L loss & ALAE?
Are they “Proj Ult Losses” as described in Text?
Or are they “Reported losses” as used by All10/CSM in Q32,98 Exam?

Or Am I missing something really stupid? Thanks for all replies.

P.S: Sorry for being so ugly references in my message, but I hope someone with All10/CSM & Tiller’s text shouldn’t have any problems to follow them.

[jk]

I am forced to conclude that you're correct. If in fact the problem as given in the manuals was taken verbatim from the exams, the word "actual" in the first line of Problem 32 should have been replaced by "reported". You would be justified, I believe, in refusing to apply the 1.25 LDF because "actual" losses, as defined by Tiller, already include loss development. I wonder if anybody solved the problem that way and challenged the exam solution.

[Ruby]

Tiller has been revised in past, but I don't think this has something to do with the revision.