[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Settlement Rate** ## Definition ==Settlement Rate== is the speed at which reported claims are closed or settled, measured as the percentage of claims closed by a given age or the average time to closure. ## Measurement ``` Closure Rate = Closed Claims / Reported Claims Average Settlement Time = Σ(Days to Close) / Number of Claims ``` ## Importance - Affects development patterns - Changes impact reserve projections - Faster settlement → Lower IBNR - Slower settlement → Higher IBNR ## Factors Affecting - Claims department staffing - Settlement authority levels - Legal environment - Operational changes - Economic conditions ## Related Concepts - [[Claims Processing Changes#Definition]] - [[Development Factor#Definition]] ## References - Friedland, Chapter 1