Or, using the (more common in commercial lines):
Arrange cumulative paid losses by accident year (year the event occurred) and development year (years after the event). Calculate “age-to-age factors” (e.g., losses from 12-24 months after the accident are typically 1.20 times losses from 0-12 months). Multiply the latest known cumulative loss for each accident year by these factors to project ultimate losses. Or, using the (more common in commercial lines):
Indicated Rate Change = (Actual Loss Ratio – Permissible Loss Ratio) / Permissible Loss Ratio Or, using the (more common in commercial lines):