Estimating Incurred Claims [Discussion]

Mr. Benedikt uses "chain relatives" based on the incurred claim totals included in Part 5 of Schedule "P " of the annual statement required for fire and casualty companies in the United States. Each total is for the losses as developed to end of calendar year (j) for claims incurred because of accidents in calendar year (i). Each total is the sum of the actual payments made before the end of year (j) plus the reserve for estimated payments to be made after the end of year (j) for claims incurred in year (i). The "chain relatives" are ratios. The "chain relative" is the ratio of developed losses to end of (j + i) to the developed losses at the end of year (j).