SCHEDULE P - TRIANGLES

Question 1

SECT C: SCHEDULE P – TRIANGLES

COMMENTS ON BALANCE SHEET RESERVES (2)

Answer 1

1. BALANCE SHEET RESERVES ARE NET OF REINSURANCE
2. BALANCE SHEET RESERVES ARE NET OF ALL DISCOUNTS

Question 2

SECT C: SCHEDULE P – TRIANGLES

PARTS OF SCHEDULE P

Answer 2

• Part 1: L + LAE
o CY EP – does not change in subsequent years
o Losses by coverage year, cumulative except for prior years row
 Paid net of S&S; unpaid can be net or gross of S&S
 Reserves are NET of TABULAR and GROSS of NONTABULAR discount
 Note: reserves in balance sheet are NET OF ALL DISCOUNTS
• Part 2: Historical net incurred loss & DCC (ultimate triangles)
o Net of reinsurance and S&S
o Gross of all discounting
• Part 3: Historical net paid loss & DCC
o Net of reinsurance and S&S
o Gross of all discounting
• Part 4: Historical net incurred loss & DCC
o Net of reinsurance and S&S
o Gross of all discounting
• Part 5: Historical claim counts
• Part 6: Historical earned premium
o Premium may change at future valuations from audits, retrospective-rated policies, reporting lag
• Part 7: Loss-sensitive loss & premium data

Question 3

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 1 - CY EP, L&LAE - DIRECT/ASSMD & CEDED (4)

Answer 3

1. S&S
   PAID L&LAE: NET OF S&S
   L&LAE RESERVES: CAN BE GROSS OR NET OF S&S
2. REINSURANCE - DIRECT/ASSUMED AND CEDED AMOUNTS ARE SHOWN
3. NON-TABULAR DISCOUNT
   L&LAE RESERVES: GROSS OF NON-TABULAR DISCOUNT
4. TABULAR DISCOUNT
   L&LAE RESERVES: NET OF TABULAR DISCOUNT

Question 4

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 2 - NET INCURRED L&LAE TRIANGLES (ULTIMATES) (4)

Answer 4

1. S&S - NET
2. REINSURANCE - NET
3. NON-TABULAR DISCOUNT - GROSS
4. TABULAR DISCOUNT - GROSS

Question 5

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 3 - NET PAID L&LAE TRIANGLES (4)

Answer 5

1. S&S - NET
2. REINSURANCE - NET
3. NON-TABULAR DISCOUNT - GROSS
4. TABULAR DISCOUNT - GROSS

Question 6

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 4 - BULK & IBNR RESERVES TRIANGLES (4)

Answer 6

1. S&S - NET
2. REINSURANCE - NET
3. NON-TABULAR DISCOUNT - GROSS
4. TABULAR DISCOUNT - GROSS

Question 7

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 5 - CLAIM COUNT TRIANGLES (3)

Answer 7

1. CLOSED WITH LOSS PAYMENT
2. OPEN CLAIMS
3. REPORTED CLAIMS

Question 8

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 6 - LOB EARNED PREMIUM TRIANGLES (2)

Answer 8

1. DIRECT & ASSMD EARNED PREMIUM
2. CEDED EARNED PREMIUM
   PREMIUMS MAY CHANGE AT FUTURE VALUATIONS FROM AUDITS, RETROSPECTIVE-RATED POLICIES & REPORTING LAG

Question 9

SECT C: SCHEDULE P – TRIANGLES

SCHED P - PART 7 - LOSS SENSITIVE TRIANGLES (1)

Answer 9

LOSS & PREMIUM TRIANGLES

Question 10

SECT C: SCHEDULE P – TRIANGLES

INTERROGATORIES

Answer 10

• Q1: Extended Reporting Endorsement (ERE) arising from Death, Disability & Retirement (DDR)
o Turns med mal CM policy into OCC policy
o Make sure coverage is being reserved for
• Q2: Does LAE = DCC + A&O?
• Q4: Disclosure on whether reserves are net of nontabular discounts
• Q6: Claim counts are per claim or per claimant?
• Q7: Any changes or special that user needs to be aware of? Most important interrogatory

Question 11

SECT C: SCHEDULE P – TRIANGLES

TABULAR RESERVES

Answer 11

• Indemnity reserves for payment schedules, discounted using actuarial tables that incorporate interest and contingencies (mortality, remarriage, inflation, recovery from disability)
• Do not include medical L & LAE reserves

Question 12

SECT C: SCHEDULE P – TRIANGLES

INTERCOMPANY REINSURANCE VS INTERCOMPANY POOLING

Answer 12

• Intercompany reinsurance: treat the same as third party reinsurance
• Intercompany pooling: combine gross and net losses, and distribute to each company based on company share
o Restate Schedule P if there is a change in pooling distribution
o Schedule P is the only exhibit in Annual Statement that doesn’t treat pooling as reinsurance

Question 13

SECT C: SCHEDULE P – TRIANGLES

CONSIDERATIONS FOR TRIANGLE ANALYSES

Answer 13

1. Retentions
2. Claims settlement and reserving
3. Business mix
4. Underlying exposure

Question 14

SECT C: SCHEDULE P – TRIANGLES

CONSIDERATIONS FOR TREND ANALYSES

Answer 14

1. Reinsurance attachment points and limits
2. Policy limits
3. Business mix (type of exposure, geography)
4. Claim counts are per claim or per claimant