Reserving II (claims settlement)

Question 1

Global reserving is mainly the responsibility of the?

Answer 1

actuarial department of the insurance company.

Question 2

Who looks at the overall reserving process and its impact on the business as a whole.

Answer 2

Actuarial department of the insurance company.

Question 3

What is reserving also referred to as?

Answer 3

It is also referred to as actuarial reserving.

Question 4

Checking data integrity, Collating historical data and Projection of claims is :

Answer 4

Claims reserving process.

Question 5

The insurance company must ensure that individual case estimates are up to date and that no processing backlogs exist, which stage is this referring to?

Answer 5

When checking the integrity of the data,

Question 6

All the estimates should also be correctly coded according to :

Answer 6

the type of business and the type of loss.

Question 7

When checking the integrity of the data, the insurance company must ensure that:

Answer 7

individual case estimates are up to date and that no processing backlogs exist.

Question 8

Motor business, can be sub-divided into private and commercial, and these can again be divided into sub-classes, which stage is this in?

Answer 8

Collating historical data

Question 9

When is the data is to be collated into similar groups, which claims reserving process stage is this?

Answer 9

Collating historical data

Question 10

When in the reserving process, the groupings should contain sufficient data to maintain statistical credibility, which stage is this in?

Answer 10

Collating historical data.

Question 11

What should a historical data contain?

Answer 11

premiums earned, the number of claims and the amount paid along with outstanding claims data.

Question 12

Historical data in claims reserving process contains??

Answer 12

premiums earned, the number of claims and the amount paid along with outstanding claims data.

Question 13

Historical data should be capable of being sorted by underwriting, calendar, policy and accident year for reporting purposes.

Answer 13

TRUE

Question 14

When claims need to be projected to establish the likely ultimate gross payout. An example of :

Answer 14

Projection of claims

Question 15

A method used to project claims is the:

Answer 15

Loss Development Factor Method

Question 16

When is the process of, (setting out the data in the form of a table showing the development of premium, claims and incurred claims (paid and outstanding) at each point in time, the data can be analysed and compared by accident, underwriting, calendar or policy year), used?

Answer 16

Triangulation (which is one of the steps of the Loss Development Factor Method)

Question 17

In addition to triangulation, what are the two steps of the Loss Development Factor Method, ?

Answer 17

Analysing the trend and calculating the claims reserves.

Question 18

To determine development factors for all underwriting years combined, what technique can be used?

Answer 18

Various averaging techniques

Question 19

The claims reserve for each accident year is then calculated by:

Answer 19

multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped.

Question 20

A detailed analysis of this method is beyond the scope of this course. (TRIANGULATION, PROJECTION OF CLAIMS, LOSS DEVELOPMENT FACTOR METHOD).

Answer 20

true…….

Question 21

A claims handler has a very important role, ensuring that (on a case by case basis) reserves are accurate.

Answer 21

True

Question 22

The estimation of individual cases will have an impact on the global reserving.

Answer 22

True

Question 23

Who has a very a very important role, ensuring that (on a case by case basis) reserves are accurate???

Answer 23

A claims handler

Question 24

What will have an impact on the global reserving???

Answer 24

Estimation of individual cases

Question 25

Insurance companies have different strategies and philosophies on reserving that are unimportant?

Answer 25

FALSE,,,

Insurance companies have different strategies and philosophies on reserving that are IMPORTANT

Question 26

Different strategies and philosophies are usually documented within reserving guides, published internally by the company.

Answer 26

True

Question 27

The damage to property (either own or third party); damages for personal injury (general damages);
third party special damages;
and legal costs (claimant and defence).
what are these???

Answer 27

Reserves that are required for all aspects of the claim.

Question 28

Information provided by loss adjusters, surveyors or engineers can assist in setting an accurate reserve, how?

Answer 28

Their reports will contain detailed costings to repair/replace the damaged property.

Question 29

when setting a reserve, it is important to consider possible policy or third party liability issues.

Answer 29

TRUE

Question 30

What can be made, should the claim be settled on a liability basis?

Answer 30

Allowances

Question 31

Reserves should be regularly reviewed, why???

Answer 31

to ensure they remain adequate,
they should be reduced as payments are made,
BUT equally should be increased if extra information comes to light, or if the claim becomes more complex.

Question 32

If the claim involves litigation, or be heading for a court trial, the legal costs could greatly increase and have a significant impact on the reserve.

Answer 32

True

Question 33

Companies prefer to be conservative while making estimates for claims reserve.

Answer 33

True

Question 34

What is not best practice when setting up a reserve?

Answer 34

being too conservative can also lead to having reserves much more than required.

Question 35

But, How are reserves recorded?

Answer 35

Usually entered onto the claims system, broken down according to policy cover or section.

Question 36

How are claims reserving calculated for each accident year?

Answer 36

By multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped.

Question 37

What is Factor or flag reserving?

Answer 37

An alternative method of individual case reserving, employed by some companies.

Question 38

What does a factor or flag reserving involve?

Answer 38

Involves a factor being added to each claim, rather than a whole case reserve.

Question 39

Where is factor or flag reserving most common in? “

Answer 39

motor damage or small personal injury claims, and is used to identify certain types of cases for trend analysis.

Question 40

Who identifies trend analysis for certain types of cases, in flag reserving or factor reserving?

Answer 40

Actuaries

Question 41

A ‘standard’ or factor reserve of, perhaps £1,000 would be added to every claim of a certain type, such as :

Answer 41

Motor accidental damage.

Question 42

An alternative method of individual case reserving, employed by some companies, is ??

Answer 42

a factor or flag reserving

Question 43

By multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped, is an example of??

Answer 43

claims reserving calculated for each accident year

Question 44

Being too conservative can also lead to having reserves much more than required, so it is best practice.

Answer 44

FALSE, (Being too conservative can also lead to having reserves much more than required, so it is NOT best practice).

Question 45

What can have significant impact on the reserve??

Answer 45

When and IF the claim involves litigation, or be heading for a court trial, the legal costs could greatly increase.

Question 46

Being too conservative can also lead to having reserves much more than required, so it is NOT best practice, But some companies prefer to be conservative while making estimates for claims reserve?

Answer 46

TRUE

Question 47

when setting a reserve, it is important to consider??

Answer 47

possible policy or third party liability issues.

Question 48

Who publishes the different strategies and philosophies that are usually documented within reserving guides?

Answer 48

It is published internally by the company.

Question 49

The reports will contain detailed costings to repair/replace the damaged property.

Answer 49

how?

Question 50

What can assist in setting an accurate reserve?

Answer 50

Information provided by loss adjusters, surveyors or engineers

Question 51

How does the Information provided by loss adjusters, surveyors or engineers assist in setting an accurate reserve?

Answer 51

Their reports will contain detailed costings to repair/replace the damaged property.

Question 52

Who provides the information that assists in setting an accurate reserve as their reports contain detailed costings to repair/replace the damaged property?

Answer 52

Loss adjusters, surveyors and engineers.

Question 53

When are Various Averaging techniques used?

Answer 53

To determine development factors for all underwriting years combined.