This is the third of a trilogy of posts demonstrating how to implement three basic deterministic Property&Casualty/General/Non-Life insurance actuarial techniques using the ChainLadder package in R.
In simplest form, the Bornhuetter-Ferguson ("BF") Method estimates IBNR for an accident/policy/underwriting/origin year (tranch of exposure) as the product of an a-priori estimate of ultimate loss for that exposure and an estimate of the percent of that ultimate loss unknown/unreported/undeveloped at the time:
In simplest form, the Bornhuetter-Ferguson ("BF") Method estimates IBNR for an accident/policy/underwriting/origin year (tranch of exposure) as the product of an a-priori estimate of ultimate loss for that exposure and an estimate of the percent of that ultimate loss unknown/unreported/undeveloped at the time:
