Mack (2000)

Question 1

MSE of R(BK) is smaller than R(BF)

Answer 1

When c*>pk/2

Question 2

The Benktander method is superior to BF and CL because

Answer 2

• Lower MSE
• Better approximation of the exact Bayesian procedure
• Superior to CL since it gives more weight to the a priori expectation of ultimate losses
• Superior to BF since it gives more weight to the actual loss experience

Question 3

Short formula for the Benktander Reserve

Answer 3

R(GB)=q x U
q=% unreported
U= Ultimate from BF

Question 4

Definition of an exposure and an exposure base

Answer 4

An exposure is the basic unit of risk underlying the insurance premium.

The definition of what an exposure represents varies by line of business and sometimes coverage is called an exposure base.