Assessment of reserving results

Question 1

• Common diagnostics include (7)

Answer 1

o Changes in loss ratios
o Paid to incurred and/or case estimates to incurred ratios
o Average outstanding case estimates
o Ratio of IBNR to case estimates
o Survival ratios (how long reserve or IBNR estimate will last if current claim development continues at a given rate)
o Claim frequency and average cost per claim
o Reinsurance to gross ratios

Question 2

• Two parties may derive different reserve estimates, even if use the same data over the same time period. This may be because (4)

Answer 2

o The data used was different (eg one had additional information or better quality information)
o The methodology used was different
o Additional information was available from underwriting and claims handling staff
o There may be genuine differences of opinion