Describe Calendar Years.
Calendar Year is transactionnal and aggregate base on the transaction occurance
Premium and Exposure and Losses are fixed at the end of the period.
Advantages:
- Readily available
- Not subject to development
Desadvantages:
- Mismatch in timing between CY Premium and CY Losses
Describe Accident Years.
Premium and Exposure are the same as CY. They are fixed at the end of year.
Losses are aggregated by date of occurance. They are not fixed at the end of year.
Advantages:
- Better match between Premium and Losses Calendar Years.
Desadvantages:
- The data is not fixed at the end, needs estimation
- Not perfect match between match between Premium and Losses
Describe Policy Years.
Aggregate Premium, Exposure and Losses by the year the policy was written.
They are not fixed at the end of year. For annual policy, it take two year for premium and exposure to be fixed.
Advantages:
- Best match between Premium and Losses
Disadvantage:
- Both Premium and Losses take longuer to develop than CY and AY
Describe Report Years.
Premium and Exposure are the same as CY. Losses are aggregated by reported date.
Commonly use in claim-made policy.
When External data is needed?
- When pricing new line of business
- To supplement internal data
When using External data, we must consider
- Reasonableness
- Appropriateness
- Comprehensivenes
- Other Factor (ASOP 23
External data include
- Statistical plans
- Competitor rates
- Other third party data
What is a Statistical Plan?
Organism (like ISO and NCCI) that collect, analyse and share data with member organisations
What are Competitor information?
Rating manual, loss cost levels, trends in losses and expanse and other information.
Hard to obtain and needs to recognize difference between compagnie when using them.
What are Other third-party data?
Other source of data like credit score data or economics statistic.
