Reserving Philosophy Flashcards
What is a reserve?
A reserve is an estimate of the likely final net cost of a claim to an insurer. A realistic assessment of the final cost based upon effective investigation of claim potential.
Why is it important that a proper reserve is set?
Proper Reserve setting is important as insurers need to ensure they have proper funds to meet their liabilities.
What two groups of people are involved in the Reserving process
The two groups of people involved in the Reserving process are Claims Handlers and Actuaries.
What does IBNR mean?
IBNR means Incurred But Not Reported.
What does IBNER mean?
IBNER means Incurred But Not Enough Reported.
What could the Prudential Regulation Authority do to an insurance company if they are having difficulties in Reserving?
If an insurance company is experiencing difficulties in Reserving the Prudential Regulation Authority could intervene and stop the insurer from trading.
