FAHM Practice Questions - AHIP Fellow, Academy For Healthcare Management (FAHM) Exam

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Why is the Bornhuetter-Ferguson method often preferred over the pure chain ladder method for the most recent two or three months of incurred claims?

Recent months have little paid data so development factors are highly leveraged and unstable Bornhuetter-Ferguson does not require any historical data Chain ladder cannot be used for medical claims Bornhuetter-Ferguson always produces lower reserves

Correct Answer:

Recent months have little paid data so development factors are highly leveraged and unstable

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