Which projection method uses paid losses plus reserves on outstanding claims?
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A. B. C. D.C
The projection method that uses paid losses plus reserves on outstanding claims is called the Incurred Loss method.
The Incurred Loss method is a common technique used in the insurance industry to estimate future losses that will arise from claims that have already been reported but not yet settled, as well as from claims that have been incurred but not yet reported. The Incurred Loss method calculates the estimated ultimate loss (EUL) by adding the total amount of paid losses to the total amount of reserves on outstanding claims.
Paid losses are the amounts of money that the insurer has already paid out in claims, while reserves on outstanding claims represent the amount of money that the insurer expects to pay out in the future for claims that have been reported but not yet settled. The reserves on outstanding claims are typically calculated by the insurer based on actuarial analysis of historical claims experience and other relevant factors.
Once the EUL is calculated using the Incurred Loss method, the insurer can then use this estimate to set appropriate premiums for insurance policies, to calculate appropriate levels of reserves, and to make other financial and operational decisions.
Therefore, the correct answer to the question is C. Incurred Loss.