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Old 05-11-2018, 05:03 PM
Daniel Daniel is offline
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Default Property Case Reserve Practice

As a reserving actuary, I am curious about the case reserve practice in other companies. My client is a short-tail property line, when a claim is reported, client's practice is setting a system default case reserve following the report, not update those case reserves until closing.

What is the industry common practice? can you share your company's practice?
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Old 05-11-2018, 06:17 PM
CuriousGeorge CuriousGeorge is offline
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Commercial Property: We will update case reserves after we have an estimate for the work to be done. Also, I don't think it's unusual to do a ballpark estimate sometime before that, as well, when the turnaround is slower.

Auto-related line: default case, followed by payment. Sounds similar to your client.
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Old 05-11-2018, 07:27 PM
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don't care what teh case reserving practice as long as it's consistent
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Old 05-11-2018, 09:36 PM
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Vorian Atreides Vorian Atreides is offline
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don't care what teh case reserving practice as long as it's consistent


And for the short tail lines, set it and forget it until closing is likely to be far cheaper than trying to be "accurate".
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Old 05-11-2018, 10:41 PM
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And for the short tail lines, set it and forget it until closing is likely to be far cheaper than trying to be "accurate".
yup
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Old 05-11-2018, 11:06 PM
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Colymbosathon ecplecticos Colymbosathon ecplecticos is offline
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Quote:
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don't care what teh case reserving practice as long as it's consistent
To play a prank on the reserving actuary, take the claims adjusters out for a beer and casually mention that they are always 10% low.
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Old 05-12-2018, 04:49 PM
jerrytuttle jerrytuttle is offline
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Default Average default reserve

This makes the most sense when the mean and standard deviation of the claim amounts are relatively small, such as in auto physical damage. It makes the least sense when the mean and standard deviation of the claim amounts are large, such as in multi-million dollar commercial property building claims.

An interesting question for you to research is how your average default reserves get into the ratemaking data.
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Old 05-14-2018, 03:18 PM
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Quote:
Originally Posted by Daniel View Post
As a reserving actuary, I am curious about the case reserve practice in other companies. My client is a short-tail property line, when a claim is reported, client's practice is setting a system default case reserve following the report, not update those case reserves until closing.

What is the industry common practice? can you share your company's practice?
I don't think that you should ask such a question as the stricken one. For one, you are essentially asking people to give you proprietary information for free over the internet.

And secondly, if you are a credentialed actuary, you should be aware that the questions may be in violation of anti-trust laws. It's not a pricing question per se, but it is discussion the expenses that support pricing. I've seen good lawyers make a good case out of less than that.
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Old 05-14-2018, 03:24 PM
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Quote:
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I don't think that you should ask such a question as the stricken one. For one, you are essentially asking people to give you proprietary information for free over the internet.

And secondly, if you are a credentialed actuary, you should be aware that the questions may be in violation of anti-trust laws. It's not a pricing question per se, but it is discussion the expenses that support pricing. I've seen good lawyers make a good case out of less than that.
Can you please point it out that how this question related to anti-trust laws? FYI, I don't believe this is proprietary information.
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Old 05-14-2018, 04:21 PM
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Vorian Atreides Vorian Atreides is offline
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Quote:
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Can you please point it out that how this question related to anti-trust laws? FYI, I don't believe this is proprietary information.
Asking people how they "do it at their company" is the exposure to anti-trust laws.

Talking about "industry standards" is fine; but not every company will do their estimates based on "industry standards" since accurate outstanding liabilities can give a company certain competitive advantages in the long-run.

Bottom line: it is not a matter of whether or not *you* think you're violating anti-trust laws. The fact that the question gives the appearance of (potentially) violating the laws that will get you in hot water.
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