Hürlimann

Question 1

Name 3 differences between Hürlimann’s method and the Benktander method

Answer 1

1. Hürlimann’s method is based on a full development triangle, whereas the Benktander method is based on a single origin period (i.e accident year or underwriting year)
2. Hürlimann’s method require a measure of exposure for each origin period (i.e. premiums)
3. Hürlimann’s method relies on loss ratios rather than link ratios to determine reserves

Question 2

What is the main result of the Hürlimann’s method?

Answer 2

It provides an optimal credibility weight for combining the chain-ladder or individual loss ratio reserve with the BF or collective loss ratio reserve

Question 3

Why we say individual and collective claims?

Answer 3

1. We say “individual” since it depends on the individual latest claim experience of an origin period
2. We say “collective” since it depends on the portfolio claims experience of all origin periods

Question 4

True or false : The individual and collective reserves estimates represent extreme positions

Answer 4

True.

The individual claims reserve assumes that the cumulative paid claims amount is fully credible for future claims and ignores the burning cost of the total ultimate claims

The collective claims reserve ignores the cumulative paid claims and relies fully on the burning cost.

Question 5

Write down the general formula for iteration based on Hürlimann

Answer 5

write