IFoA SP7 Practice Questions - IFoA SP7 General Insurance Reserving And Capital Modelling Exam

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In the basic chain ladder method, what does a development factor (link ratio) for development period j to j+1 primarily estimate?

The proportionate growth in cumulative claims from one development period to the next The ultimate loss ratio for the most recent accident year The expected number of claims reported in the next calendar year The discount factor applied to future claim payments

Correct Answer:

The proportionate growth in cumulative claims from one development period to the next

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