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Old 10-05-2018, 02:54 PM
TDH TDH is offline
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Default Using industry patterns for individual account pricing

I have access to a number of industry development patterns which are on a underwriter (policy) year basis. I want to use these for developing losses on an individual account as it's a brand new account.

I am thinking a basic adjustment to make the the pattern will be to add 6 months to the deveopment, e.g. if the development month is 12 months, we would look at the 12 + 6 = 18 month from the benchmark development pattern. This is because the industry data is an aggregate over a number of policies, and I'm assuming that on average, they incept halfway through the year. So 12 months on an account basis would be 18 months on the pattern. Does this make sense? What other adjustments would you make?
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Old 10-08-2018, 12:19 PM
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DeepPurple DeepPurple is offline
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Originally Posted by TDH View Post
I have access to a number of industry development patterns which are on a underwriter (policy) year basis. I want to use these for developing losses on an individual account as it's a brand new account.

I am thinking a basic adjustment to make the the pattern will be to add 6 months to the deveopment, e.g. if the development month is 12 months, we would look at the 12 + 6 = 18 month from the benchmark development pattern. This is because the industry data is an aggregate over a number of policies, and I'm assuming that on average, they incept halfway through the year. So 12 months on an account basis would be 18 months on the pattern. Does this make sense? What other adjustments would you make?
Seems reasonable. You have PY losses, whose avg accident date is 12 months after the beginning of the period. You area applying to losses on an AY basis whose avg accident date is the middle of the period, so you want to adjust for the 6 month lag difference. This is a standard approach. Accelerate the PY loss patterns by 6 months. Make sure you interpolate correctly.
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