The Interpolator tool estimates monthly Loss Development Factors from a source of annual factors beginning from 6 months to 180 months. Based upon months from policy inception, these monthly factors may be applied to a mid-year loss run in order to estimate ultimate losses for a policy period.
The interpolated LDFs can be used to calculate implied development for each month of the year, which allows a comparison of actual losses by month to the expected losses to determine if losses are developing more or less than expected.
The Interpolator tool is included for RISK66 licensed users. Login to RISK66 and click the “Analytic Tools” icon on the left menu:
Add a client folder, or hover an existing folder. Then hover the Add File button and select
the “New Interpolator” icon
The Interpolator screen shown below will open allowing you to enter a Description for the File.
By default, the starting month will be set to 12. Starting month values from 6 months to 180 are allowed.
In the Incurred and/or Paid columns, enter the known loss development factors. If both Incurred and Paid LDF’s are entered, the Incurred factors should always be less than the corresponding paid factors.
The LDF’s entered can be:
benchmark LDFs like those used in Loss Forecaster, which are developed internally by SIGMA Actuarial
or
- unique client LDFs developed through loss development triangles, assuming the client has sufficient history to develop unique LDFs.
The requirements for the factors being interpolated are:
there must be two months of factors
and
- the factors entered must be on an annual basis from the first month factor.
Sample of Data Entry: Incurred Only Factors
Results of Data Entry: Incurred Only Factors
Sample Report: Incurred Only Factors
Sample Export: Incurred Only Factors
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