CAS Exam 5: Basic Techniques for Ratemaking and Reserving

Ratemaking Topics

Exam 5 covers the fundamental techniques for developing insurance rates. Key topics include loss trending, development, and on-leveling premium. You will learn how to calculate indicated rate changes using both the loss ratio and pure premium methods. The exam tests your understanding of expense loading, profit provisions, and the overall ratemaking process from data collection through rate filing. Experience rating and schedule rating concepts are also covered.

Reserving Topics

The reserving portion covers methods for estimating unpaid claim liabilities, including the chain-ladder (development) method, Bornhuetter-Ferguson method, and expected loss ratio method. You must understand how to evaluate reserve adequacy and select among different estimation methods. The exam emphasizes practical application: given a data triangle, can you calculate development factors, project ultimate losses, and estimate reserves? Focus on understanding the assumptions underlying each method and when those assumptions may be violated in practice.