Question

An actuarial intern compiles the following claims information for the year 2017:

Claim Number | Accident Date | Report Date | Reserve(s) | Payment Activity
K001 | October 7, 2016 | October 21, 2016 | 1,500 as of December 31, 2016 | 500 as of December 31, 2017, 800 paid on May 4, 2017, 1,000 paid on January 11, 2018
K002 | March 14, 2017 | July 5, 2017 | 3,400 as of December 2017 | 3,000 paid on March 5, 2018
K003 | September 9, 2017 | September 30, 2017 | 5,000 as of December 31, 2017 | 4,200 as of December 31, 2018, 1,300 paid on April 7, 2018, 3,500 paid on June 1, 2019
K004 | November 22, 2017 | January 14, 2018 | 4,500 paid on May 18, 2018

Calculate the total incurred losses for AY2017 as of December 31, 2018.

Options:
a) $10,200
b) $12,000
c) $13,200
d) $15,500
e) $16,800

Answer 1

The total incurred losses for AY2017 as of December 31, 2018, is $11,100.

Step-by-step explanation:

To calculate the total incurred losses for AY2017 as of December 31, 2018, we need to add up all the reserve amounts and payments made for each claim. Let's go through each claim:

1. Claim K001: This claim has a reserve amount of $1,500 as of December 31, 2016. On December 31, 2017, $500 was still reserved. In addition, $800 was paid on May 4, 2017, and $1,000 was paid on January 11, 2018. So the total incurred losses for this claim by December 31, 2018, is $500 + $800 + $1,000 = $2,300.
2. Claim K002: This claim has a reserve amount of $3,400 as of December 2017. On March 5, 2018, $3,000 was paid. Therefore, the total incurred losses for this claim by December 31, 2018, is $3,000.
3. Claim K003: This claim has a reserve amount of $5,000 as of December 31, 2017. On April 7, 2018, $1,300 was paid, and on June 1, 2019, $3,500 was paid. So the total incurred losses for this claim by December 31, 2018, is $1,300.
4. Claim K004: This claim has no reserve amount. Only $4,500 was paid on May 18, 2018. Therefore, the total incurred losses for this claim by December 31, 2018, is $4,500.

To get the total incurred losses for AY2017 as of December 31, 2018, we add up the incurred losses for each claim: $2,300 + $3,000 + $1,300 + $4,500 = $11,100.