Question 1
In the basic chain ladder method, what does a development factor (age-to-age or link ratio) of 1.25 between development years 1 and 2 indicate?
Correct Answer:
Cumulative claims at development year 2 are expected to be 25% higher than at development year 1
Question 2
The Bornhuetter-Ferguson (BF) reserving method combines which two elements?
Correct Answer:
An a priori expected loss estimate and a development-pattern weighting
Question 3
A class has an a priori ultimate loss of 1,000, and the cumulative development factor to ultimate is 2.0. Using Bornhuetter-Ferguson, what is the IBNR reserve?
Correct Answer:
500
Question 4
Which reserving method is generally MOST appropriate for the most recent (least developed) accident year of a long-tailed liability class?
Correct Answer:
Bornhuetter-Ferguson or expected loss ratio
Question 5
In Mack's stochastic chain ladder model, what is the primary output beyond the central reserve estimate?
Correct Answer:
The mean squared error of prediction (prediction error) of the reserves
Question 1
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Prepare with the IAI SP7 Practice Questions - IAI SP7 General Insurance Reserving and Capital Modelling Exam practice quiz. This question bank includes 100 questions covering reserving, capital, model, claims, and risk. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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IAI SP7 Practice Questions - IAI SP7 General Insurance Reserving and Capital Modelling Exam

This practice set contains 100 questions from the matching question bank and focuses on reserving, capital, model, claims, and risk. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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