Loss Development Triangle Calculator
Calculate loss development factors and ultimate loss projections using chain-ladder methodology.
Inputs
Results
Ultimate Loss
$992,000.00
≈ 24 Teslas
IBNR Reserve
$42,000.00
≈ 4 years of state college
How to Use This Calculator
- Enter cumulative paid losses for development years 1 through 5.
- The calculator computes age-to-age development factors between consecutive years, including Dev Factor 1-2 and Dev Factor 2-3.
- A tail factor is derived from the later development factors to estimate growth beyond year 5, producing the Dev-to-Ultimate Factor.
- Ultimate Loss is projected by applying the Dev-to-Ultimate Factor to Year 1 Paid Losses.
- IBNR Reserve is the difference between projected Ultimate Loss and Year 5 Paid Losses.
How the result changes with Year 5 Paid Losses
| Year 5 Paid Losses | Ultimate Loss | IBNR Reserve |
|---|---|---|
| $10,000,000.00 | -$2,540,500.00 | $0.00 |
| $35,000,000.00 | -$1,995,500.00 | $0.00 |
| $65,000,000.00 | -$1,950,500.00 | $0.00 |
| $90,000,000.00 | -$1,890,500.00 | $0.00 |
What each input means
- Year 1 Paid Losses
- Cumulative paid losses at the end of development year 1
- Year 2 Paid Losses
- Cumulative paid losses at the end of development year 2
- Year 3 Paid Losses
- Cumulative paid losses at the end of development year 3
- Year 4 Paid Losses
- Cumulative paid losses at the end of development year 4
- Year 5 Paid Losses
- Cumulative paid losses at the end of development year 5
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersYear 1 Paid Losses = 500000, Year 2 Paid Losses = 750000, Year 3 Paid Losses = 875000, Year 4 Paid Losses = 925000 = 5 input(s) provided
- Calculate Ultimate LossUltimate Loss992000 = $992,000
- Calculate IBNR ReserveIBNR Reserve42000 = $42,000
- Calculate Dev Factor 1-2Dev Factor 1-21.5 = 1.5
- Calculate Dev Factor 2-3Dev Factor 2-31.167 = 1.167
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators.
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