A question from a sitting in 1992 asks if the following statement is true:
Loss development factors account only for the emergence of incurred but not reported claims.
Doesn't the answer depend on whether we assume a broad vs. narrow definition of IBNR? If we assume the broad definition of IBNR (IBNR includes IBNER), as is done in Friedland's manual, then the statement is true. If we assume the narrow definition of IBNR (IBNR does not include IBNER), as is done in the answer, then the statement is false.
Thus, this question isn't very good in that it doesn't clarify whether to assume a broad or narrow definition of IBNR. I hope future exams don't have questions like this.
Loss development factors account only for the emergence of incurred but not reported claims.
Doesn't the answer depend on whether we assume a broad vs. narrow definition of IBNR? If we assume the broad definition of IBNR (IBNR includes IBNER), as is done in Friedland's manual, then the statement is true. If we assume the narrow definition of IBNR (IBNR does not include IBNER), as is done in the answer, then the statement is false.
Thus, this question isn't very good in that it doesn't clarify whether to assume a broad or narrow definition of IBNR. I hope future exams don't have questions like this.
Broad vs Narrow Definition of IBNR on Exam
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