ALAE Methods. Methods are similar to the paid loss development method, the reported loss development method, the Bornhuetter-Ferguson paid loss method, the Bornhuetter-Ferguson reported loss method, the reported count and average value method and the reported losses with de-trended average open claim. Average paid ALAE per closed claim was not used because ALAE often involve periodic payments and payments may not be related to the claims that are closed. An additional method, the reported ALAE as a percent of reported loss method, is similar to the reported count and average value method.
2009-3
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Buying Real Estate with Installment Contracts
A wonderful, but not widely known alternative method to purchasing real estate is through the use of an installment contract.
Sometimes called a “land contract” or “warranty agreement,” the installment contract is another creative approach to real estate investing, especially for prospective buyers who are currently unable to qualify for a satisfactory mortgage loan.
As its name implies, the installment contract purchases real estate in installments. It works much like a “lay- away” plan to buying property with the seller retaining ownership of the property until all payment requirements have been satisfied. Unlike the store “lay-away” plan, however, the installment contract approach allows the buyer to occupy and use the property during the contract period.
The main advantage that installment contracts offer is the opportunity to buy the property with a refinance loan, rather than a purchase loan. The benefit of this advantage is that a refinance can eliminate the need for cash to cover the down payment and closing costs.
2009-3
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Reported losses with de-trended average open claim method
Reported losses with de-trended average open claim method. This method is also known as the Berquist-Sherman method. Average case basis reserves at prior levels of maturity are re-stated using an assumed trend rate. The case basis report losses are then adjusted to reflect a more stable average case reserve. Adjusted reported losses equal paid losses plus the number of open claims times the adjusted average open claim value. The trend rate was selected judgmentally based on a review of average paid claim severities and other indications. Methods similar to the reported loss development method, the Bornhuetter-Ferguson reported loss method, and the reported count and average value method are applied to adjusted reported losses. This method adjusts for case reserving methods that may have changed over time.