Diagnostics

Question 1

Diagnostic tests for

Stronger case adequacy

Answer 1

1. Triangles avg paid and avg case O/S
   -­ If the avg case is increasing faster than avg paid (Severity), then case strengthening may be occuring
2. Paid $ / Reported $
   -­ If decreasing, then the case strenghtening may be occuring

Question 2

Diagnostic tests for

Slowdown in payments

Answer 2

1. Triangle paid count / Reported count
   -­ If decreasing , then a slowndown in payment
2. Paid $ / Reported $
   - If decreasing

Question 3

Diagnostic tests for

Large unpaid claim

Answer 3

1. Avg paid and avg case O/S
   -­ If the avg case jumps up while avg paid soen’t change as much, then a large unpaid claim may be present
2. Paid $ / Reported $
   -­ If it decreases significantly fo AY specific, it may due to a large unpaid claim

Question 4

What can you detect with

Closed #/ Rept #

Answer 4

• Increase in the column = Speedup in Settlement
• Decrease in the column = Slowdown in Settlement

Question 5

What can you detect with

Paid $ / Rept $

Answer 5

• Increase in the column = Speedup in settlement and/or Decrease in case reserve adequacy
• Decrease in the column= Slowndown settlement and/or increase in case reserve

Question 6

What can you detect with

Paid severity

Answer 6

• Increase = Inflation , mix of business shift, speedup in handling larger claims

Question 7

What can you detect with

Rept Severity

Answer 7

• Increase = Inflation
  or mix of business shift
  or increase in case reserve adequacy

Question 8

What can you detect with

Avg case O/S

Answer 8

-­ Increase = Increase in case adequacy
or Speedup in settlement of smaller claims (leaving larger claims open)
or mix of business shift