Reserving II (claims settlement) Flashcards
Please Read Estimating and Reserving and the Reserving process of Chapter 3 and Chapter 6
Global reserving is mainly the responsibility of the?
actuarial department of the insurance company.
Who looks at the overall reserving process and its impact on the business as a whole.
Actuarial department of the insurance company.
What is reserving also referred to as?
It is also referred to as actuarial reserving.
Checking data integrity, Collating historical data and Projection of claims is :
Claims reserving process.
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?
When checking the integrity of the data,
All the estimates should also be correctly coded according to :
the type of business and the type of loss.
When checking the integrity of the data, the insurance company must ensure that:
individual case estimates are up to date and that no processing backlogs exist.
Motor business, can be sub-divided into private and commercial, and these can again be divided into sub-classes, which stage is this in?
Collating historical data
When is the data is to be collated into similar groups, which claims reserving process stage is this?
Collating historical data
When in the reserving process, the groupings should contain sufficient data to maintain statistical credibility, which stage is this in?
Collating historical data.
What should a historical data contain?
premiums earned, the number of claims and the amount paid along with outstanding claims data.
Historical data in claims reserving process contains??
premiums earned, the number of claims and the amount paid along with outstanding claims data.
Historical data should be capable of being sorted by underwriting, calendar, policy and accident year for reporting purposes.
TRUE
When claims need to be projected to establish the likely ultimate gross payout. An example of :
Projection of claims
A method used to project claims is the:
Loss Development Factor Method
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?
Triangulation (which is one of the steps of the Loss Development Factor Method)
In addition to triangulation, what are the two steps of the Loss Development Factor Method, ?
Analysing the trend and calculating the claims reserves.
To determine development factors for all underwriting years combined, what technique can be used?
Various averaging techniques
The claims reserve for each accident year is then calculated by:
multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped.
A detailed analysis of this method is beyond the scope of this course. (TRIANGULATION, PROJECTION OF CLAIMS, LOSS DEVELOPMENT FACTOR METHOD).
true…….
A claims handler has a very important role, ensuring that (on a case by case basis) reserves are accurate.
True
The estimation of individual cases will have an impact on the global reserving.
True
Who has a very a very important role, ensuring that (on a case by case basis) reserves are accurate???
A claims handler
What will have an impact on the global reserving???
Estimation of individual cases
Insurance companies have different strategies and philosophies on reserving that are unimportant?
FALSE,,,
Insurance companies have different strategies and philosophies on reserving that are IMPORTANT
Different strategies and philosophies are usually documented within reserving guides, published internally by the company.
True
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???
Reserves that are required for all aspects of the claim.
Information provided by loss adjusters, surveyors or engineers can assist in setting an accurate reserve, how?
Their reports will contain detailed costings to repair/replace the damaged property.
when setting a reserve, it is important to consider possible policy or third party liability issues.
TRUE
What can be made, should the claim be settled on a liability basis?
Allowances
Reserves should be regularly reviewed, why???
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.
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.
True
Companies prefer to be conservative while making estimates for claims reserve.
True
What is not best practice when setting up a reserve?
being too conservative can also lead to having reserves much more than required.
But, How are reserves recorded?
Usually entered onto the claims system, broken down according to policy cover or section.
How are claims reserving calculated for each accident year?
By multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped.
What is Factor or flag reserving?
An alternative method of individual case reserving, employed by some companies.
What does a factor or flag reserving involve?
Involves a factor being added to each claim, rather than a whole case reserve.
Where is factor or flag reserving most common in? “
motor damage or small personal injury claims, and is used to identify certain types of cases for trend analysis.
Who identifies trend analysis for certain types of cases, in flag reserving or factor reserving?
Actuaries
A ‘standard’ or factor reserve of, perhaps £1,000 would be added to every claim of a certain type, such as :
Motor accidental damage.
An alternative method of individual case reserving, employed by some companies, is ??
a factor or flag reserving
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??
claims reserving calculated for each accident year
Being too conservative can also lead to having reserves much more than required, so it is best practice.
FALSE, (Being too conservative can also lead to having reserves much more than required, so it is NOT best practice).
What can have significant impact on the reserve??
When and IF the claim involves litigation, or be heading for a court trial, the legal costs could greatly increase.
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?
TRUE
when setting a reserve, it is important to consider??
possible policy or third party liability issues.
Who publishes the different strategies and philosophies that are usually documented within reserving guides?
It is published internally by the company.
The reports will contain detailed costings to repair/replace the damaged property.
how?
What can assist in setting an accurate reserve?
Information provided by loss adjusters, surveyors or engineers
How does the Information provided by loss adjusters, surveyors or engineers assist in setting an accurate reserve?
Their reports will contain detailed costings to repair/replace the damaged property.
Who provides the information that assists in setting an accurate reserve as their reports contain detailed costings to repair/replace the damaged property?
Loss adjusters, surveyors and engineers.
When are Various Averaging techniques used?
To determine development factors for all underwriting years combined.
