Odomorik 15: Schedule P

Question 1

Schedule P Part 1

Answer 1

Loss & LAE and EP as of 12/31

Question 2

Schedule P Part 2

Answer 2

Historical net incurred loss & DCC estimates

Question 3

Schedule P Part 3

Answer 3

Historical net paid loss & DCC

Question 4

Schedule P Part 4

Answer 4

Historical net IBNR for loss & DCC (before tabular discount)

Question 5

Schedule P Part 5

Answer 5

Historical claim counts (CWP, open, reported)

Question 6

Schedule P Part 6

Answer 6

Historical EP

Question 7

Schedule P Part 7

Answer 7

Loss/premium data on loss sensitive contracts

Question 8

DCC examples

Answer 8

Surveillance expenses, litigation management expenses, fees for rehab nurses, cost of engaging experts

Question 9

AAO examples

Answer 9

Fees of adjusters/settling agents

Fees for appraisers, PIs, hearing representatives, fraud inspectors

Question 10

DCC assignment treatment

Answer 10

Assigned by AY in accordance with associated losses

Question 11

AAO assignment

Answer 11

“Any justifiable way”; preferred way is to apportion expenses in proportion to number of claims reported/closed/outstanding by AY

Question 12

Salsub in schedule P

Answer 12

For information purposes only; paid losses always net of Salsub

Question 13

Case reserves from Schedule P

Answer 13

Part 2 - Part 3 - Part 4

Question 14

Issues with using Schedule P in actuarial projections

Answer 14

Allocations are judgmental
Internal pooling/reinsurance
IBNR as case (vol pools)
Only 10 AYs
Commutation distortion
Combining of DCC and A&O
Lacks management discussion

Question 15

Claim frequency

Answer 15

Claim counts (5) / EP (1)

Question 16

Decrease in settlement rates

Answer 16

Reduction in staff; growth in book with same staff; CAT claims – understated projection

Question 17

Increase in settlement rates

Answer 17

Produce overstated projection

Question 18

Difference between P/6 and P/1

Answer 18

P/6 shows cumulative premiums earned; premiums may change at future dates (audits, retro rated, lags)

Question 19

Interrogatory 1: Schedule P

Answer 19

EREs – offered for free? How is DDR reserve reported (UEPR? Loss reserve?); Ensures coverage has been reserved for EREs

Question 20

Interrogatory 2: Schedule P

Answer 20

Definition of LAE – should be DCC and AAO

Question 21

Interrogatory 4: Schedule P

Answer 21

Disclosure regarding whether reserves are net of non-tabular discounts

Question 22

Disclosure of non-tabular discount

Answer 22

Only allowed if permission granted from state regulator; needs to be included in Notes to Financial Statements

Question 23

Interrogatory 6: Schedule P

Answer 23

Claim counts reported per claim or per claimant?

Question 24

Interrogatory 7: Schedule P

Answer 24

Any changes/special that user needs to be aware of if she relies on Schedule P data to assess adequacy of reserves (factors must be disclosed)