Schedule P: Updating Parts 2 & 3
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Update Schedule P, Parts 2 & 3 for the new calendar year. (See 2016.Spring #12)
Part 2: Incurred Net Loss & DCC at Year-End
AccYr |
CY-2 |
CY-1 |
CY |
prior |
---- |
---- |
---- |
AY-1 |
|
---- |
---- |
AY |
|
|
---- |
Part 3: Cumulative Paid
AccYr |
CY-2 |
CY-1 |
CY |
prior |
---- |
---- |
---- |
AY-1 |
|
---- |
---- |
AY |
|
|
---- |
Part 4: Bulk & IBNR
AccYr |
CY-2 |
CY-1 |
CY |
prior |
---- |
---- |
---- |
AY-1 |
|
---- |
---- |
AY |
|
|
---- |
New CY Information:
AccYr |
Paid |
IBNR |
Case |
prior |
---- |
---- |
---- |
AY |
---- |
---- |
---- |
AY+1 |
---- |
---- |
---- |
A
Calculate Part 3 first and use this important fact:
The amounts in the prior year row in Part 3 are defined to be the amounts paid since the end of the year in the first column.
That means the top left corner of the Part 3 triangle, will be 0.
(Prior and AY-1 paid from CY-1 column need to be backed out of NEW prior.)
Step 1
drop the oldest CY column
sum the 2 oldest AYs into the NEW prior year row
Step 2
add the given new CY+1 paid amounts to the NEW CY column to get the NEW CY+1 column
Step 3
back out the prior and AY-1 paid from the entire NEW prior row. Part 3 is DONE!
B
Now we can calculate the NEW Part 2 following the steps below:
Step 1
original unpaid triangle = (original part 2) - (original part 3)
Step 2
calculate NEW unpaid triangle following the pattern of Step A.1 from A above.
Step 3
NEW Part 2 = (NEW unpaid triangle) + (NEW paid triangle)
(where the NEW paid triangle is the NEW part 3 that we already calculated)
Solution:
NEW Part 2: Incurred Net Loss & DCC at Year-End
AccYr |
CY-1 |
CY |
CY+1 |
prior |
---- |
---- |
---- |
AY |
|
---- |
---- |
AY+1 |
|
|
---- |
NEW Part 3: Cumulative Paid
AccYr |
CY-1 |
CY |
CY+1 |
prior |
---- |
---- |
---- |
AY |
|
---- |
---- |
AY+1 |
|
|
---- |
intermediate step: updated unpaid
(add to NEW Part 3 to get NEW Part 2)
AccYr |
CY-1 |
CY |
CY+1 |
prior |
---- |
---- |
---- |
AY |
|
---- |
---- |
AY+1 |
|
|
---- |