Q1a 2018
Hi,
In your toolkit labeled Q1a_2018, you use ult claim count divided by EP to consider premium growth. Would it be incorrect to use ultimate losses instead of premium growth?
Thank you!
Hi,
In your toolkit labeled Q1a_2018, you use ult claim count divided by EP to consider premium growth. Would it be incorrect to use ultimate losses instead of premium growth?
Thank you!
Comments
Sorry, I meant "ultimate losses instead of earned premium"
I don't think it would be appropriate given we have information available for earned premiums.
The ultimate losses are subject to many more influences than earned premiums. For example, our ultimate loss opinion may be biased which could obscure growth. Or there is likely some form of inflationary trend present which would persist even if the size of the book had remained constant.
So while you could look at the ratio of ultimate claim counts to ultimate losses (inverse severity), I think it would be much harder to reasonably conclude the book is growing than it is when you use earned premium.