Loss development triangles conveniently display the combination of:

Question

Options

• Adevelopment period and a future period
• Bpresent period and a future period
• Cpast period and a development period
• Dorigin period and a development period

• A
  13% (2)
• C
  6% (1)
• D
  81% (13)

Explanation

Option D is correct because loss development triangles are structured with origin periods as the rows (e.g., accident year, policy year) and development periods as the columns (e.g., 12 months, 24 months of age), creating the triangle shape as more recent origin periods have fewer development columns available.

Option A is wrong because "future period" is not an axis of the triangle - the triangle displays historical data only; projections come after the triangle is analyzed. Option B fails for the same reason: "present period" and "future period" are not dimensions of the structure. Option C is close but uses imprecise language - "past period" is vague and non-standard; the correct actuarial term is origin period, which specifies when the losses were incurred (accident year, underwriting year, etc.).

Memory tip: Think "O + D = Triangle" - Origin period (the row, when it happened) × Development period (the column, how old the losses are). The triangle shape itself is your reminder that development data gets shorter as you move to more recent origins.

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