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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] |
Insurance
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. The insurance transaction involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms. Furthermore, it usually involves something in which the insured has an insurable interest established by ... [...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] |
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] |
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] |
Solvency II
Solvency II Directive 20092009/138/EC is a Directive in European Union law that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency. Following an EU Parliament vote on the Omnibus II Directive on 11 March 2014, Solvency II came into effect on 1 January 2016. This date had been previously pushed back many times. Aims EU insurance legislation aims to unify a single EU insurance market and enhance consumer protection. The third-generation Insurance Directives established an "EU passport" (single licence) for insurers to operate in all member states if they fulfilled EU conditions. Many member states concluded the EU minima were not enough, and took up their own reforms, which still led to differing regulations, hampering the goal of a single market. Political implications of Solvency II A number of the large Life Insurers in the UK are unhappy with the way the leg ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Stochastic
Stochastic (, ) refers to the property of being well described by a random probability distribution. Although stochasticity and randomness are distinct in that the former refers to a modeling approach and the latter refers to phenomena themselves, these two terms are often used synonymously. Furthermore, in probability theory, the formal concept of a ''stochastic process'' is also referred to as a ''random process''. Stochasticity is used in many different fields, including the natural sciences such as biology, chemistry, ecology, neuroscience, and physics, as well as technology and engineering fields such as image processing, signal processing, information theory, computer science, cryptography, and telecommunications. It is also used in finance, due to seemingly random changes in financial markets as well as in medicine, linguistics, music, media, colour theory, botany, manufacturing, and geomorphology. Etymology The word ''stochastic'' in English was originally used as a ... [...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] |
