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Foundations of Casualty Actuarial Science

analysis procedure is to compare the allocated expenses
paid to the paid losses on the same claims, and follow
the development of the relationship of paid allocated
expense to paid loss over time.

The relationship of paid allocated loss expense to paid
loss is then derived .Age to age development factors
applying to the ratios of paid allocated loss adjustment
expense are to be taken from the triangle. Then the
ultimate ratio is chosen. The selected ultimate ratio is
then applied to the estimate losses to obtain an estimate
of ultimate allocated loss adjustment expense.

The development triangle and selected averages of the
development factors for these expenses are then
considered. The analyst then chooses the development
patterns which is the most likely to occur in the future.
Based on those selected factors, paid allocated loss
expense may be the projected to an ultimate basis.

h) Unallocated Loss Adjustment Expenses (ULAE)-
In addition to estimating the liability for allocated loss

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