Schedule P Flashcards
Functions of Schedule P (DT-RAPID)
Development of reserves (2, 3, 4)
Trends in freq/sev (1, 2, 5)
RBC calc, loss sensitive discount (7)
Adequacy of Reserves (2, 3, 4, 5)
Payment patterns for discounting (3)
IBNR vs case split (2, 3, 4)
Disclosures for SAO (1)
P.1
tables of everything by AY - losses, expenses, premiums, claim counts
P.2
triangles of ult losses
P.3
triangles of paid losses
P.4
triangle of IBNR (not including case reserves)
P.5
triangles of claim counts by LOB
P.6
triangles of earned premium by LOB
P.7
tables and triangles for loss-sensitive contracts
Years of Schedule P history?
10
Which parts have a summary section?
1, 2, 3, 4
NOT 5, 6, 7
Medical Professional Liability (claims-made) reporting convention
Report Year
Commercial Auto Liability/Medical (Occurrence) reporting convention
Accident Year
Products Liability (Tail Coverage) reporting convention
Policy Year
Surety reporting convention
Discovery Year
Case Loss Incurred in CY
- calculate cumulative case triangle: total incurred - paid - IBNR (P.2 - P.3 - P.4)
- calculate cumCY case - cum(CY-1) case to get change in case reserve in CY
- calculate cumCY paid - cum(CY-1) paid to get paid in CY
- case incurred in CY = change(case) + paid in CY
Is Schedule P net or gross of recoverables?
IF sal/sub shown in Part 1 then SchP is net
Average case outstanding severity
(P.2 - P.3 - P.4) / P.5
Limitations of SchP in assessing reserve adequacy
Talk to people - numbers don’t show the full picture
Only 10 years of data so long-tailed lines are cut short
Pooling can distort data (internal, voluntary/involuntary, changing level of participation over time)
Parts 2, 3, and 4 exclude DCC (can’t separate DCC trends from loss trends)
Preparation allows for choice in allocations and presentations
Changes in business practices that interfere with SchP interpretation
Mix of business
Reserving practices
Claim settlement practices
Growth/shrinkage
Retentions
Limits
Intercompany pooling
Definition of claim count
Commutations
