Using the same analogy as IBNR, the PDR accounts for the earned but not
reported premiums. This is due to the fact that payroll at audit can be
substantially different from the anticipated at the time when the policy
is written.
I would use a historically premium triangle, analyze it as if they were
loss triangles and project premium accordingly(using traditional loss
development method should suffice). One thing needs to keep in mind is
that, premium deficiency reserve is highly sensitive to economical cycle
and it can be negative as well as positive depends on which part of the
cycle you are in.
In addition, premium developments are usually short. They are usually
fully developed within 3 to 5 years. There is no need for tail fitting,
which makes it easy.
I hope this will help. I am not aware of any literature that talks
about this, but I think some of considerations for reserving apply here.
---Yin
----------
From: Andre_Perez@mail.busca.bm
To: karen.schmitt@zurich.com
Cc: casnet@lists.casact.org; harald.brechbuehl@zurich.com
Subject: Re: Premium Deficiency Reserves
Date: Thursday, July 23, 1998 7:27AM
Hi Karen,
You should call someone at Zurich Canada (Dave Oakden) as this
computation is part of the stat requirements in Canada.
Cheers,
Andre Perez
KPMG Peat Marwick
karen.schmitt@zurich.com,Internet-GW writes:
>To: <casnet@lists.casact.org>
>Cc: <harald.brechbuehl@zurich.com>
>From: <karen.schmitt@zurich.com>
>Subject: Premium Deficiency Reserves
>Date: Thu, 23 Jul 1998 10:11:14 +0200
>I have recently calculated the deficiency in the unearned premium
>reserves,
>but in a rough way I feel. The only guidance I have found on this
>issue is
>a single paragraph in the Part 7 accounting book. Has anyone done
this
>calculation, and is there a source in the actuarial or accounting
>literature which provides guidance? Any tips would be appreciated.
>Thanks,
>Karen Schmitt
>Visit the CAS Web Site at http://www.casact.org
>To subscribe or unsubscribe from CASNET:
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--
Andre Perez, FCAS FCIA
Associate & Consulting Actuary
(441) 295-5063 x316
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