Friedland Part II

  1. 4 phases approach for reserving
    • Exploratory analysis of the data
    • Apply appropriate techniques for estimating unpaid claims
    • Evaluate conflicting results of the various methods
    • Monitor projections of clm dvpmt over subsequent calendar periods
  2. Sources of data
    • Larges insr often solely rely on internal data (may use ext for new lob/terr)
    • Small insr have small volume w. less credibility
    • Examples of external sources: ISO, NCCI, RAA, Best
  3. Uses of external data
    • Tail devpmt factors
    • Trend rates
    • ECR
    • Evaluating and reconciling results of various methods
  4. Key characteristics when evaluating cred of data
    • Consistency of coverage triggered
    • Volume of clm cnt
    • Ability to develop appropriate CO
    • Settlement or pmt patterns
    • Likelihood of clm reopening
    • Severity
  5. Determination of size criteria for large clms
    • Nbr of clms over treshold
    • Size of clm relative to policy limits
    • Size of clm relative to reins limits
    • Cred of internal data regarding large claims
    • Availability of relative external data
  6. Verification of data
    • Consistency w. financial statement data
    • Consistency w. prior data
    • Data reasonableness
    • Data definitions
  7. Aggregation by CY
    • Transactional data
    • CY rpd = pd + beg - end
    • Primary used for aggregation of exposures
    • Adv: no dvpmt, readiliy available
    • Dis: inability to address issue of dvpmt
  8. Aggregation by AY
    • CY exposures often used w. AY claims
    • Adv: grouping easy to achieve and understand; shorter time frame than PY; track economic or regulatory chg
    • Dis: mismatch btwn clms and exposures; can mask chg in retention
  9. Aggregation by PY
    • Clms extend over a 24 mths period
    • Adv: true match btwn clms and exposures; track uw or pricing chg
    • Dis: extended time frame; difficult to isolate and understand affect of a single large event
  10. Aggregation by RY
    • Claims-made coverages is dependent on rpt date
    • Used to estimate value of know clms
    • Adv: nbr clms is fixed
    • Dis: only measures dvpmt on know clms
  11. Ratio of Pd to Rpt
    • Test for chgs in CO adequacy, settlement patterns
    • Downward trend in ratio could be result of
    • Decreasing paid claims
    • Increasing case adequacy
  12. Ratio of closed to rpt clm cnt
    • Measures chg in settlement rate of clms
    • Chgs in ratio could be due to
    • Large caT
    • Chg in guidelines for establishment of a clm
    • Restructuring of clm field offices
    • Introduction of new call center
Card Set
Friedland Part II
Exam6 by Esaie Friedland Part II