Berquist Sherman

[blackjack]

Need some help on the following problem (also found in All10 Manual):

Question is on p. 23 of this document: http://www.casact.org/admissions/stu...ams/F98PT7.pdf

Solution is on p. 14 of this document: http://www.casact.org/admissions/stu...s/F98PT7SS.pdf

My question is, how did they get the 36, 48 and 60 month figures?

PS - Tried copying and pasting everything here, but the formatting kept getting screwed up.


Thanks for your help!

[chinese_girl]

The calculation is a linear interpolation just like what we usually do in the AOI relativity interpolation in Homeowners ratemaking.

24 month:
You know 
  Actual claims        Actual paid losses
      4000               20000
      7300               35000

You need to figure out what’s the paid losses for 7100 claims.
Adjusted paid losses = 20000 + (7100-4000)/(7300-4000)*(35000-20000)=34091

36 month:
  Actual claims        Actual paid losses
      8500               45000
Since the adjusted claim count is also 8500, so the paid losses is 45000

48 month:
  Actual claims        Actual paid losses
      9200               52000
     10000               56000
You need to figure out what’s the paid losses for 9500 claims.
Adjusted paid losses = 52000 + (9500-9200)/(10000-9200)*(56000-52000)=53500

[blackjack]

Chinese Girl - THANKYOU! Your explanation made it all clear. I really appreciate your help, as this had been driving me crazy!