- TIA EXAM 5 - FRIEDLAND CH 01

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To whom is it important that we accurately estimate unpaid claims?
- 1. Internal Management
- 2. Investors
- 3. Regulators
- 4. State Law
- 5. NAIC
Importance of accurately estimating unpaid claims for Internal Management
- Internal management
- Influences pricing
- Influences decision making:
- UW - increase business, exit market
- Strategic - reinsurance needs
- Financial - capital management
Importance of accurately estimating unpaid claims for Investors
- Investors
- Can cause misstated balance sheet & income statement
- Misleading financial metrics
Importance of accurately estimating unpaid claims for Regulators
- Regulators
- Rely on financial statements to supervise
- Misstatement of true financial position can delay regulators intervention/help
Ranges of unpaid clm estimates
Different methods produce varying estimates
- Balance sheet requires point estimate (some require 75% confidence level)
Define an Actuarial central estimate

Actuarial central estimate: expected value over the range of reasonably possible outcomes
Define Insurer

Risk bearer for P&C exposures
Define Reserves

Amount booked in a financial statement
Define Unpaid Claim estimate

Actuary's estimate of the obligation for future payment resulting from clms due to past events
Define Carried Reserve

Carried reserve: amt reported in a published statement
5 components of unpd clm estimate
- Case outstanding on know clms
- Prov for future dvpmt on know clms
- Estimate for reopened clms
- Prov for clms IBNR
- Prov for clms in transit
IBNR claims are often split into two components.
What are they are why is this done?
- 1. IBNYR (pure IBNR)
- 2. IBNER (aka development on known claims
Separated to test adequacy of Case O/S over time

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Card Set

- TIA EXAM 5 - FRIEDLAND CH 01

Description

FRIEDLAND CH 01

Updated

2011-02-13T16:53:13Z

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