Question

please show work

sa. Small Potatoes (SP) is a microchip company. On average, 40 percent of Sp's product liability claims for a calendar year are reported during the calendar year. For 2018, 20 product liability claims were reported during the calendar year. How many product liability claims (ultimately) should SP expect for 2018? (1 point) b. SP's loss development factors for product liability and general liability are provided below: Months after End of endar Year: 12 18 24 30 36 Product Liability 4.1 3.4 2.5 1.5 1.1 General Liability 3.0 2 .1 1.6 1.3 1.0 1. Two and half years after the end of a calendar year, general liability claims to-date were $1.6 million. What ultimate general liability claims should SP expect for this calendar year? (half-point) 2. Eighteen months after the end of a calendar year, product liability claims to-date were $2.2 million. What ultimate product liability claims should SP expect for this year? (half-point)

Answer 1

a) Given, Average product liability claims for a year = 40%

For 2018, No. of product liability claims reported = 20

Product liability claim expected = 40% of 20 = 8 cases.

b) Expected General liability claims 30 months after the end of a calendar year: 1.3 /2.8 x 1.6 million = $ 0.742857 million

c) Expected Product liability claims 18 months after the end of a calendar year: 3.4/5.5 x 2.2 million = $ 1.36 millions