Development Factor Triangle: Age to the Age calculation

The Development Factor Triangle is calculated by using the Cumulative Triangle. Irrespective of a selected Triangle, the Development Factor, and Age to Age Factor is always derived from the Cumulative Triangle, except for outstanding triangles.

The following is the formula used for calculating the different averages:

  • Simple Average – Latest 5: It calculates the simple average of the latest 5 years that are available in the Development Factor Triangle. Note that if the data is available till the year 2020, then the Development Factor will contain factors only till the year 2019. Based on this understanding the latest year, in this case, will be 2019 and not 2020. The simple 5-year average is calculated by using the years 2015, 2016, 2017, 2018, and 2019 years.
  • Simple Average – Latest 3: It calculates the simple average of the latest 3 years available in the Development Factor Triangle. For example, the years 2017, 2018, and 2019.
  • Simple Average – Latest 2: It calculates the simple average of the latest 2 years available in the Development Factor Triangle. For example, the years 2018 and 2019.
  • Volume weighted average – Latest 5: It calculates the Volume Weighted Average of the latest 5 years that are available in the Development Factor Triangle. It calculates the Weighted Average by using the Development Factors from the Development Triangle and the corresponding numbers from the Cumulative Triangle.
  • Volume weighted average – Latest 4: It calculates the Volume Weighted average of the latest 4 years that are available in the Development Factor Triangle. It calculates the Weighted Average by using the Development Factors from the Development Triangle and the corresponding numbers from the Cumulative Triangle.
  • Volume weighted average – Latest 3: It calculates the Volume Weighted Average of the latest 3 years available in the Development Factor Triangle. It calculates the Weighted Average by using the Development Factors from the Development Triangle and the corresponding numbers from the Cumulative Triangle.
  • Volume weighted average – Latest 2: It calculates the Volume Weighted Average of the latest 2 years that are available in the Development Factor Triangle. It calculates the Weighted Average by using the Development Factors from the Development Triangle and the corresponding numbers from the Cumulative Triangle.
  • All-year average: It calculates the Simple Average by using all the available years in the Development Triangle.
  • Geometric Average – Latest 3: It calculates the Geometric Average of the latest 3 years available in the Development Factors Triangle.
  • Selected: This section displays all the selected averages. This section is editable and can be modified after selecting an average. Users can select any of the above-average by clicking the radio button based on their observation or requirement.
  • Cumulative Development Factor: This section calculates the Cumulative Development Factor (CDF). The calculation uses a user-selected row as a base.
  • Ratio to Ultimate Factor: The Ratio to Ultimate Factor is calculated based on the Cumulative Development Factor.
  • Custom: Depicts the user customised development factor.