Assessment of reserving results

Question 1

o Data can be a problem particularly for reinsurers because (7)

Answer 1

 Claim reporting delays are longer
 There is a greater tendency for claims to develop upwards
 Exposure can be very heterogeneous
 Data can be sparse
 Benchmarks are often less relevant
 There can be IT constraints
 There is more opportunity to group data differently

Question 2

• Reserving for inwards reinsurance

Answer 2

o For most reinsurance reserving exercises, paid claims development patterns are more reliable than incurred
o For short-tailed business, normal triangulation (or even simpler) methods may well be used, although catastrophes should be treated separately
o For medium and long-tailed business, we can use the same methods, but taking extra care where development years have not matured, for example by using hybrid methods. We should consider both paid and incurred development patterns,

Question 3

• Reserving for outwards reinsurance:
  o The five main methods are (6):

Answer 3

 Use data gross and net of reinsurance, the find the difference
 Perform standard triangulation techniques directly on reinsurance data alone
 Adjust gross data using a broad brush approach
 Case-by-case approach on only the largest losses
 Develop all individual losses then apply the reinsurance to each one
 Derive a reserve distribution net of reinsurance