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Foundations of Casualty Actuarial Science

ultimate level based on the assumption that each loss
year will be completed in a way that is analogous to
prior years. It should be noted that there is substantial
variation from method to method.

The analyst has to choose a point estimate in some
fashion. The choice is dependent on the supporting
information the analyst develops concerning company
operations as well as further statistical tests.

d) Reserved Development Method - The triangular
methods either use paid or incurred data exclusively,
but do not use any historical relationships between paid
amounts and case reserved amounts. The reserve
development method attempts to analyze the adequacy
of case reserves based on the history of payments
against those case reserves.

There are several approaches, viz Report Year
Approach, and Accident Year Approach.

e) Bornhuetter-Ferguson (BF)- There are many cases,
where relying solely on paid or incurred loss development

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