The Development Triangle and Triangle Diagnostics Flashcards
(12 cards)
Development Triangles
Shows changes in various values of cohorts over time. Used to identify and analyze different patterns. Estimates reported claims, paid claims, claim-related expenses, and reported claim counts
Identify aspects of the Triangle Structure
Rows - Experience Period (accident year)
Columns - Age of maturity
Diagonals - Valuation date
Claim Coding
Labeling the claim as one thing at first but this can change depending on the situation
What should actuaries understand about the environment?
The specific circumstances of the insurer’s organization and the economic, social, legal and regulatory environments that will also affect the
liability
How do actuaries gain insight?
Collect data through formal meetings and informal conversations and look at all relevant aspects of business operations
Relevant Operations for Actuaries
- Claims Executives
- Underwriting Executives
- Data Processing (IT)
- Actuarial Partners
- Economic/Legal Environment
Claims Executives Meeting
Specific objectives and guidelines for setting case reserves
Underwriting Executives Meeting
Discuss important guidelines and attributes
IT Executives
Discuss the data processing procedures and coding for
Actuarial Partners
Discuss shifts in business based on risk or type of claim based on what is happening in the economy
Economic/Legal Environment
Understanding the changing environment and legal conditions
Key Assumptions of the Development Method
- Future claims’ development is similar to prior years’ development
- Implicitly assumes claims observed for an immature AY tell you something about claims yet to be observed
- Consistent Claims Processing
- Stable mix of claims types
- Stable policy limits
- Stable reinsurance retention limits throughout experience period
