*Please note the unusual location of this talk.*
Actuarial reserving is the practice of estimating the current value of all future liabilities an insurer has taken on through its policies, and is necessary in order to set aside an adequate reserve. This estimation process is challenging since it may take several years for all claims in a given policy period to be reported and closed. In addition, information pertaining to existing claims is often altered long after the end of a policy period.
In order to develop an estimate of reserves to set aside, actuaries evaluate the development of reported and paid claims over time. In this seminar, we will first delve into the claims process, following a claim from its first report to the insurer to its ultimate settlement. Next we will introduce the concept of a loss development triangle, a way of displaying how a group of claims evolve over time. The development triangle is one of the most common tools used by actuaries to evaluate claims. We will then explore some basic techniques for estimating an insurance company’s unpaid claims by going through a detailed case study for an event insurance company with two lines of insurance, medical insurance and indemnity.
This talk is based on a case studies project that won first prize in the Actuarial Students National Association Case Competition 2017.