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atkinsmt
05-06-2010, 10:44 PM
For the second part of the FUNDAMENTAL INSURANCE EQUATION question what did y'all put down for how the various components change because of the change to experienced adjusters. I almost started writing thinking it was underwriters.

Which leads me to another thought. Is "U/W" generally accepted to mean underwriting on the exam? Or could some grader act goofy and not accept it?

Vorian Atreides
05-06-2010, 10:52 PM
U/W should be okay to use for "underwriting" and I wouldn't worry about it.

Also, experienced adjusters can reduce expenses overall (even though they might garner a higher salary) since they can actually process more claims in the same amount of time.

They can also reduce losses overall since they can identify fraudulent claims more readily than an inexperienced adjuster.

ScubaChris
05-07-2010, 12:22 AM
I wrote that the inexperienced adjusters would be more likely to over-reserve and after the experienced adjusters came in the reserves would be lower, thus lowering losses but they would be paid more so LAE would be higher.

And in several instances I did shorthand underwriting by putting "U/W"
I also shorthanded WC for Workers' Comp. I hope it's not a problem.

illiniActuary
05-07-2010, 09:12 AM
I said that having experienced adjusters would not necessary lower your losses. inexperienced adjusters might under reserve. Having experienced adjusters, however, should be beneficial in the sense that the case reserves are more accurate.

Also, i was under the impression that claim adjuster's salary does not factor into underwriter expense, it is part of ULAE. So i put that it may lower losses, or atleast make it more accurate, does not effect profit or u/w expense. Makes the premium to reflect the truer cost of insurance.

ScubaChris
05-07-2010, 09:49 AM
But LAE is still part of the equation.
And I do think it was dumb of me to just assume inexperienced adjusters would over-reserve and not under-reserve.

fsumath
05-07-2010, 12:48 PM
But LAE is still part of the equation.
And I do think it was dumb of me to just assume inexperienced adjusters would over-reserve and not under-reserve.
I put the experience adjusters must handling loss adjustment expenses better by perhaps negotiating liability claims quicker reduced the ALAE.

bunnyluv
05-07-2010, 03:00 PM
I think because they are more experienced, that they would be more likely to settle damages more accurately and for less money (on the theory that plaintiff lawyers and such will conduct business in their own favor) . I did include the fact that their salaries would be higher than the inexperienced ones; I believe this is generally allocated to ULAE unless the adjusters are independent.

This may be one of those questions with a broad range of acceptable answers.