Chapter 7 A Model for Reserving Workers Compensation High Deductibles - J. Siewert

6 methods and their pros and cons:

  1. Loss Ratio Method

  2. Implied Development

  3. Direct Development

    • See the 2 methods, (7.3) and (7.4), for calculating the \(^{XS}LDF^L_t\)

    • (7.4) is basically from method 5 proposition 7.3

  4. Credibility Weight Method

    • Formula (7.5) weighting 1 and 3

  5. Development Method

    1. Severity needs to be trended

    2. Claim counts are developed separately ground up

    3. \(\star \star\) Relativities 7.1, severity LDF formulas, know them well to manipulate and know what formula requires what

      • Proposition 7.1 and 7.2 are simlar one for limited one for XS

        • Might need to break out the \(LDF_t\) into it’s components
      • Proposition 7.3 combines the above
        • Note the 3 proposition above works with LDF if we sub out the ultimate relativities

      • Proposition 7.4 and 7.5 are for incremental LDFs

  6. Distribution Method

    • Use Weibull for \(R_t^L\)

Finally there’s the method for accounting for aggregate charge with collective risk model or table M