What is the formula for Loss development factor?

Ultimate = cumulative to date × age-to-ultimate factor. IBNR = ultimate − incurred to date Past development pattern repeats

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Project ultimate claims for an accident year from its development pattern (chain ladder, one step).

Finance & unit economics

Insurance

Ultimate = cumulative to date × age-to-ultimate factor. IBNR = ultimate − incurred to date
Past development pattern repeats

NoteThe factor comes from your own claims triangle; use the product of age-to-age factors. Actuarial sign-off is still needed.

Source: Chain-ladder method (CAS reserving texts; Friedland, Estimating Unpaid Claims)

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