Question: 5. An actuary projects reserves using the closure method with a severity trend factor of 5% per annum. Percentage of claims closed and average incremental

5. An actuary projects reserves using the closure method with a

5. An actuary projects reserves using the closure method with a severity trend factor of 5% per annum. Percentage of claims closed and average incremental severity trended to CY5 are estimated as follows: Development Year 0 1 2. 3 4 30% 50% 60% 80% 100% 200 240 300 340 400 Percentage of claims closed Trended average incremental severity to CY5 The actuary expects 500 ultimate claim counts for accidents in AY3. If 150 claims are closed in DY0 and also in DY1, compute the projected ultimate amount of loss payments for AY3

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