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Latest Research
CLRS To Feature New Reserving Papers
by Sarah J. Fore, Chairperson, CAS Committee on Reserves 2004 Call Paper ProgramComplex issues that challenge the property/casualty insurance industry affect the actuarial profession and the reserving process within our profession. To help actuaries gain the expertise necessary to address these issues, the CAS Committee on Reserves sought papers through its 2004 Call Paper Program on several relevant topics. Papers were received on Statements of Actuarial Opinion and accounting issues, changing exposures, reserve variability, and new or improved reserving techniques.
The committee accepted eight papers that will be presented by the authors at the 2004 Casualty Loss Reserve Seminar in Las Vegas on September 13-14. During the opening session, the papers deemed by a prize committee to contribute most to the current CAS literature on reserving will be recognized. A brief summary of each of the papers follows. The authors are not included at this time while the prize committee evaluates the papers.
Two papers address reserving for workers compensation liabilities. One discusses the estimation of the tail factor through an analysis of medical payments and through a model that reflects medical cost escalation and the force of mortality in closing claims. The second describes a method for estimating the implications of layoffs, plant closures, and downsizing in the reserving process.
The Statement of Actuarial Opinion is the subject of two papers. The importance of reconciling the data used in the reserving analysis to Schedule P data is one paper’s focus. This paper also gives guidance to the appointed actuary and provides examples. The other paper discusses the professional considerations and judgments applicable to atypical situations, such as exceptional values on IRIS tests and items that require disclosure for material adverse deviation, and provides sample wording.
Another paper demonstrates how expert opinion can be used in the stochastic framework for reserving. To do this, the author utilizes Bayesian methods and describes its implementation through a detailed example using freely available software.
The increasingly important subject of reserve variability is addressed in one paper. This paper presents a method that can be used to estimate the correlation of reserve estimates between the different areas analyzed in the reserve evaluation, which allows for the combination of estimates in a meaningful way.
Finally, two papers discuss accounting issues and their applications to the reserving process. The newly developed International Accounting Standards for Insurance is one paper’s focus. This paper provides general background information about the standards and focuses on the new challenges, particularly in loss reserving, actuaries will face when implementing these standards. In addition to addressing financial reporting for nontraditional reinsurance, the other paper also introduces features of common types of finite risk reinsurance contracts.
The papers will be available through the web site and published in the 2004 Fall Forum prior to the 2004 Casualty Loss Reserve Seminar.
