Important ones that need to be stated

Key Actuarial Justifications

These are standard justifications and assumptions that should be explicitly stated on the exam when selecting parameters.

LDF Selections (Changing Trends):

“There is an apparent downward trend in the loss development factors. I have selected a 2-year average to remain responsive to the recent trend without being overly reactive to single-year anomalies.”
Underwriting Expenses (Fixed Expenses):

“I assume that premium trends at the same rate as fixed expenses, meaning the fixed expense ratio remains constant and does not require explicit trending.”
- Alternative: “For simplicity and without a significant loss of accuracy, I have trended all fixed expenses using the average written date.”

Disposal Rates (Changing Settlement Speed):

“Disposal rates have been trending downward, indicating a slowdown in closing claims. I have selected the latest 3-year average to be more responsive to this shift while remaining conservative in case the trend stabilizes.”