Friedland Part I

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Friedland Part I
2010-09-09 15:17:39
Exam6 by Esaie

Exam6 by Esaie Friedland Part I
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  1. Importance of accurately estimating unpaid claims
    • Internal management
    • Influences pricing
    • Influences decision making
    • UW - increase business, exit market
    • Strategic - reinsurance needs
    • Financial - capital management
    • Investors
    • Can cause misstated balance sheet
    • Misleading financial metrics
    • Regulators
    • Rely on financial statements to supervise
    • Misstatement of true financial position can delay regulators intervation
    • Others
    • State Law
    • NAIC
  2. Ranges of unpaid clm estimates
    • Different methods produce varying estimates
    • Balance sheet requires point estimate (some require 75% confidence level)
    • Actuarial central estimate: expected value over the range of reasonably possible outcomes
  3. Define Insurer
    Risk bearer for P&C exposures
  4. Define Reserves
    • Amount booked in a financial statement
    • Actuary's estimate of the obligation for future payment resulting from clms due to past events
    • Carried reserve: amt rpt in a published statement
  5. 5 components of unpd clm estimate
    • Case outstanding on know clms
    • Prov for future dvpmt on know clms
    • Estimate for reopened clms
    • Prov for clms INBR
    • Prov for clms in transit
  6. Claims professionals
    • Employee of insr (large insr)
    • Third-Party clms administrators (TPA) (small to mid-sized, handle specific book of clms)
    • Independent adjuster (IA) (individual clm or grp, specific type of clm, region, disaster)
  7. Approaches to establish CO
    • Best estimate of ultimate value
    • Set at policy limit
    • Seek advice of legal council on probabilities (set at mode or mean)
  8. CY vs AY Incurred Losses
    • CY Inc L = Pd + Ending - Beginning
    • AY Inc L = Pd + End