The Cape Cod method is Ultimate Losses = Actual Reported Losses + (1-1/CDF)(OnLevel Premium * Claims Ratio).. where claims ratio = reported loss/(reported percentage * onlevel premium)..
The cape cod method focuses on trending and on leveling the premium..
What I don't understand is the Claims Ratio? How exactly does this project the IBNR portion if there isn't any developed losses in the claims ratio?
The cape cod method focuses on trending and on leveling the premium..
What I don't understand is the Claims Ratio? How exactly does this project the IBNR portion if there isn't any developed losses in the claims ratio?
Cape Code Question
