What affects claims from all origin periods and all development periods that are in the process of settling during a calendar period?

Question

Options

• AReserving
• BClaim courts
• CInflation
• DAccrual ratios

• A
  9% (3)
• B
  16% (5)
• C
  72% (23)
• D
  3% (1)

Explanation

Inflation cuts across the entire claims triangle diagonally along the calendar period axis, meaning any claim being settled during a given calendar year - regardless of when the loss occurred (origin period) or how long it has been developing (development period) - is subject to the same economic price levels, such as rising medical costs, wages, and legal awards. This diagonal effect is the defining characteristic of calendar-year influences, and inflation is the primary driver of that pattern.

Why the distractors are wrong:

• A. Reserving affects specific individual claims or groups at a point in time; it doesn't uniformly impact all origin/development combinations simultaneously.
• B. Claim courts influence only litigated claims and apply selectively, not to every claim settling in a period.
• D. Accrual ratios is not a standard concept describing a cross-period effect; it does not describe a mechanism that spans all origin and development periods at once.

Memory tip: Picture a loss development triangle - origin periods run down, development periods run across, and calendar periods are the diagonals. Inflation travels along those diagonals because it is a "right now" economic force that hits every open claim at the moment of settlement, no matter how old or how long it has been developing. If a question mentions "all origin periods AND all development periods," think diagonal → think calendar year → think inflation.

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