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Chain-ladder Method
The chain-ladder or developmenthttps://www.casact.org/library/studynotes/Friedland_estimating.pdf method is a prominent actuarial loss reserving technique. The chain-ladder method is used in both the property and casualtyhttps://www.casact.org/library/studynotes/Werner_Modlin_Ratemaking.pdf and health insurance fields. Its intent is to estimate incurred but not reported claims and project ultimate loss amounts. The primary underlying assumption of the chain-ladder method is that historical loss development patterns are indicative of future loss development patterns. Methodology According to Jacqueline Friedland's "Estimating Unpaid Claims Using Basic Techniques," there are seven steps to apply the chain-ladder technique: # Compile claims data in a development triangle # Calculate age-to-age factors # Calculate averages of the age-to-age factors # Select claim development factors # Select tail factor # Calculate cumulative claim development factors # Project ultimate claims ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Loss Reserving
Loss reserving refers to the calculation of the required reserves for a tranche of general insurance business.Schmidt, K. D., Zocher, M.The Bornhuetter–Ferguson Principle Variance 2:1, 2008, pp. 85-110. It includes outstanding claims reserves. Typically, the claims reserves represent the money which should be held by the insurer so as to be able to meet all future claims arising from policies currently in force and policies written in the past. Methods of calculating reserves in general insurance are different from those used in life insurance, pensions and health insurance since general insurance contracts are typically of a much shorter duration. Most general insurance contracts are written for a period of one year, and typically there is only one payment of premium at the start of the contract in exchange for coverage over the year. Reserves are calculated differently from contracts of a longer duration with multiple premium payments since there are no future premiums to c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
General Insurance
General insurance or non-life insurance policy, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determined to be life insurance. It is called property and casualty insurance in the United States and Canada and non-life insurance in Continental Europe. In the United Kingdom, insurance is broadly divided into three areas: personal lines, commercial lines and London market. The London market insures large commercial risks such as supermarkets, football players, corporation risks, and other very specific risks. It consists of a number of insurers, reinsurers, P&I Clubs, brokers and other companies that are typically physically located in the City of London. Lloyd's of London is a big participant in this market. The London market also participates in personal lines and commercial lines, domestic and foreign, through reinsurance. Commercial ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Health Insurance
Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among many individuals. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization, such as a government agency, private business, or not-for-profit entity. According to the Health Insurance Association of America, health insurance is defined as "coverage that provides for the payments of benefits as a result of sickness or injury. It includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment". Background A health i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Incurred But Not Reported
In insurance, incurred but not reported (IBNR) claims is the amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the severity of each loss, IBNR is necessarily an estimate. The sum of IBNR losses plus reported losses yields an estimate of the total eventual liabilities the insurer will cover, known as ultimate losses. IBNR and IBNER The term "IBNR" is sometimes ambiguous, as it is not always clear whether it includes development on reported claims. ''Pure IBNR'' refers to only unreported claims, not any development on reported claims. ''Incurred but not enough reported (IBNER)'', in contrast, refers to development on reported claims. For example, when a claim is first reported, a $100 payment might be made, and a $900 case reserve might be established, for a total initial reported amount of $1000. However, the claim may later settle for a larger amou ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Loss Development Factor
Loss development factors or LDFs are used in insurance pricing and reserving to adjust claims to their projected ultimate level. Insurance claims, especially in long-tailed lines such as liability insurance, are often not paid out immediately. Claims adjusters set initial case reserves for claims; however, it is often impossible to predict immediately what the final amount of an insurance claim will be, due to uncertainty around defense costs, settlement amounts, and trial outcomes (in addition to several other factors). Loss development factors are used by actuaries, underwriters, and other insurance professionals to "develop" claim amounts to their estimated final value. Ultimate loss amounts are necessary for determining an insurance company's carried reserves. They are also useful for determining adequate insurance premiums, when loss experience is used as a rating factor Loss development factors are used in all triangular methods of loss reserving, such as the chain-ladder metho ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Incurred But Not Reported
In insurance, incurred but not reported (IBNR) claims is the amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the severity of each loss, IBNR is necessarily an estimate. The sum of IBNR losses plus reported losses yields an estimate of the total eventual liabilities the insurer will cover, known as ultimate losses. IBNR and IBNER The term "IBNR" is sometimes ambiguous, as it is not always clear whether it includes development on reported claims. ''Pure IBNR'' refers to only unreported claims, not any development on reported claims. ''Incurred but not enough reported (IBNER)'', in contrast, refers to development on reported claims. For example, when a claim is first reported, a $100 payment might be made, and a $900 case reserve might be established, for a total initial reported amount of $1000. However, the claim may later settle for a larger amou ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bornhuetter–Ferguson Method
The Bornhuetter–Ferguson method is a loss reserving technique in insurance. Background The Bornhuetter–Ferguson method was introduced in the 1972 paper "The Actuary and IBNR", co-authored by Ron Bornhuetter and Ron Ferguson.The actuary and ibnr casact.org Like other loss reserving techniques, the Bornhuetter–Ferguson method aims to estimate insurance claim amounts. It is primarily used in the property and casualty and [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Loss Reserving
Loss reserving refers to the calculation of the required reserves for a tranche of general insurance business.Schmidt, K. D., Zocher, M.The Bornhuetter–Ferguson Principle Variance 2:1, 2008, pp. 85-110. It includes outstanding claims reserves. Typically, the claims reserves represent the money which should be held by the insurer so as to be able to meet all future claims arising from policies currently in force and policies written in the past. Methods of calculating reserves in general insurance are different from those used in life insurance, pensions and health insurance since general insurance contracts are typically of a much shorter duration. Most general insurance contracts are written for a period of one year, and typically there is only one payment of premium at the start of the contract in exchange for coverage over the year. Reserves are calculated differently from contracts of a longer duration with multiple premium payments since there are no future premiums to c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
