age-to-age paid loss development and age-to-ult factors

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I am studying ultimate claims. There it shows how to calculate the age-to-age paid loss-development factors by looking at the previous year claims amounts and their cumulative of claims to date.
Then they magically use age-to-ult factor and multiply it by cumulative paid to-date to get the value of Estimated ultimate claims.
How do I calculate the age-to-ult factor?




actuarial-science




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    I am studying ultimate claims. There it shows how to calculate the age-to-age paid loss-development factors by looking at the previous year claims amounts and their cumulative of claims to date.
    Then they magically use age-to-ult factor and multiply it by cumulative paid to-date to get the value of Estimated ultimate claims.
    How do I calculate the age-to-ult factor?




    actuarial-science




    share|cite|improve this question





















      up vote
      0
      down vote

      favorite









      up vote
      0
      down vote

      favorite











      I am studying ultimate claims. There it shows how to calculate the age-to-age paid loss-development factors by looking at the previous year claims amounts and their cumulative of claims to date.
      Then they magically use age-to-ult factor and multiply it by cumulative paid to-date to get the value of Estimated ultimate claims.
      How do I calculate the age-to-ult factor?




      actuarial-science




      share|cite|improve this question











      I am studying ultimate claims. There it shows how to calculate the age-to-age paid loss-development factors by looking at the previous year claims amounts and their cumulative of claims to date.
      Then they magically use age-to-ult factor and multiply it by cumulative paid to-date to get the value of Estimated ultimate claims.
      How do I calculate the age-to-ult factor?





      actuarial-science





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      share|cite|improve this question




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      asked Jul 30 at 20:44









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          The age-to-ultimate factor is the product of the various age-to-age factors from the given age on. Typically, development stops after a certain age so all of the age-to-age factors are $1.0$ from some point on (there may be a tail factor as well).



          So you can find the ultimate value by multiplying the latest paid loss by all of the age-to-age factors from that loss's age onwards.



          For example, if the age-to-age factors are



          • 12-24: $1.5$

          • 24-36: $1.2$

          • 36-48: $1.1$

          • no more development past 48 months

          then the 12-ultimate factor is $(1.5)(1.2)(1.1)=1.98$, and you would multiply the latest paid amount (presumably now aged 12 months) by this to get the ultimate projection.



          Intuitively, the 12-24 factor takes the loss from 12 months (now) to 24 months; then the 24-36 factor takes it from 24 months to 36 months; the 36-48 factor takes it from 36 months to 48 months; at that point development stops, so it is at ultimate.






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            The age-to-ultimate factor is the product of the various age-to-age factors from the given age on. Typically, development stops after a certain age so all of the age-to-age factors are $1.0$ from some point on (there may be a tail factor as well).



            So you can find the ultimate value by multiplying the latest paid loss by all of the age-to-age factors from that loss's age onwards.



            For example, if the age-to-age factors are



            • 12-24: $1.5$

            • 24-36: $1.2$

            • 36-48: $1.1$

            • no more development past 48 months

            then the 12-ultimate factor is $(1.5)(1.2)(1.1)=1.98$, and you would multiply the latest paid amount (presumably now aged 12 months) by this to get the ultimate projection.



            Intuitively, the 12-24 factor takes the loss from 12 months (now) to 24 months; then the 24-36 factor takes it from 24 months to 36 months; the 36-48 factor takes it from 36 months to 48 months; at that point development stops, so it is at ultimate.






            share|cite|improve this answer



























              up vote
              2
              down vote



              accepted










              The age-to-ultimate factor is the product of the various age-to-age factors from the given age on. Typically, development stops after a certain age so all of the age-to-age factors are $1.0$ from some point on (there may be a tail factor as well).



              So you can find the ultimate value by multiplying the latest paid loss by all of the age-to-age factors from that loss's age onwards.



              For example, if the age-to-age factors are



              • 12-24: $1.5$

              • 24-36: $1.2$

              • 36-48: $1.1$

              • no more development past 48 months

              then the 12-ultimate factor is $(1.5)(1.2)(1.1)=1.98$, and you would multiply the latest paid amount (presumably now aged 12 months) by this to get the ultimate projection.



              Intuitively, the 12-24 factor takes the loss from 12 months (now) to 24 months; then the 24-36 factor takes it from 24 months to 36 months; the 36-48 factor takes it from 36 months to 48 months; at that point development stops, so it is at ultimate.






              share|cite|improve this answer

























                up vote
                2
                down vote



                accepted







                up vote
                2
                down vote



                accepted






                The age-to-ultimate factor is the product of the various age-to-age factors from the given age on. Typically, development stops after a certain age so all of the age-to-age factors are $1.0$ from some point on (there may be a tail factor as well).



                So you can find the ultimate value by multiplying the latest paid loss by all of the age-to-age factors from that loss's age onwards.



                For example, if the age-to-age factors are



                • 12-24: $1.5$

                • 24-36: $1.2$

                • 36-48: $1.1$

                • no more development past 48 months

                then the 12-ultimate factor is $(1.5)(1.2)(1.1)=1.98$, and you would multiply the latest paid amount (presumably now aged 12 months) by this to get the ultimate projection.



                Intuitively, the 12-24 factor takes the loss from 12 months (now) to 24 months; then the 24-36 factor takes it from 24 months to 36 months; the 36-48 factor takes it from 36 months to 48 months; at that point development stops, so it is at ultimate.






                share|cite|improve this answer















                The age-to-ultimate factor is the product of the various age-to-age factors from the given age on. Typically, development stops after a certain age so all of the age-to-age factors are $1.0$ from some point on (there may be a tail factor as well).



                So you can find the ultimate value by multiplying the latest paid loss by all of the age-to-age factors from that loss's age onwards.



                For example, if the age-to-age factors are



                • 12-24: $1.5$

                • 24-36: $1.2$

                • 36-48: $1.1$

                • no more development past 48 months

                then the 12-ultimate factor is $(1.5)(1.2)(1.1)=1.98$, and you would multiply the latest paid amount (presumably now aged 12 months) by this to get the ultimate projection.



                Intuitively, the 12-24 factor takes the loss from 12 months (now) to 24 months; then the 24-36 factor takes it from 24 months to 36 months; the 36-48 factor takes it from 36 months to 48 months; at that point development stops, so it is at ultimate.







                share|cite|improve this answer















                share|cite|improve this answer



                share|cite|improve this answer








                edited Jul 30 at 20:55


























                answered Jul 30 at 20:50









                MPW

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