Which lines of insurance have the longest development tails?

Workers' compensation, medical malpractice, and general liability are the longest-tail lines, with tail factors sometimes exceeding 2.0 (cumulative development more than doubles beyond the 10-year diagonal). Auto property damage and homeowners are short-tail with development completing within 2–3 years.

How does the Bondy method estimate the tail factor?

The Bondy method assumes the last observed age-to-age factor is representative of all future development factors beyond the available data: tail factor = last observed factor ^ (expected number of remaining development periods). It is a simple, reproducible approach used when limited tail data is available.

Loss Reserve Development Tail Factor

Calculate the loss development tail factor using the inverse power curve, exponential decay, or Bondy method to extrapolate cumulative development beyond the last available accident year.

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Frequently Asked Questions

Which lines of insurance have the longest development tails?

How does the Bondy method estimate the tail factor?