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  #11  
Old 03-12-2018, 08:52 PM
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Originally Posted by glassjaws View Post
Future projected incurred claims could either be reported claims or IBNR. If the established incurred claim estimate is $X for either, I don't see the point of the distinction. It seems like you would be splitting incidence for no real value.
More background: I have an actuarial software that projects the claim reserves and cash flows for individual claims (claims that are reported, obviously).
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  #12  
Old 03-12-2018, 09:22 PM
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Sounds like someone in Finance is being an idiot.
Kick it upstairs, because someone upstairs in Finance is asking this of his/her minions.

I'm not in P&C, but I have been asked this in Health. From idiots in Finance.

However, it is possible for you use your software to predict the future IBNR. Please craft your caveats carefully so that you are not bound to your predictions.
You should be able to predict the expected IBNR as well as a variance. DO NOT IGNORE THE VARIANCE. It should be included in your caveats!!
IBNR is definitely affected by exposure, so someone has to provide you with that information. You should not be responsible for guessing new sales. Go up 10%, go down 10%. See how sensitive your estimates are to change in sales and retention.

tl;dr version:
Too much work, don't bother to try.
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  #13  
Old 03-14-2018, 06:19 PM
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We could all be on the moon by then.

You'd be surprised how non-technical reserve calculations can be. I know a big company whose finance people actually do them. It could be a very simple exercise, and expressed on a per capita basis to get around guessing at volume.

I mean, like in LTD, for one thing IBNR is extremely variable because the rate of incident is variable AND all the parameters (benefit, salary, offset, demographics) lumped together make a big difference. You can't seriously project that 5 years out.

Also, DTNF, we're neighbors!
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  #14  
Old 03-14-2018, 10:27 PM
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Ok. But the IBNR projections are important because they affect your planned earnings. If you lower them, that's a gain. Would you then increase the amount of projected DLR or benefits paid in cash to ensure there's no gain ?

Or maybe it's okay if there's a gain/loss ?
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  #15  
Old 03-15-2018, 12:33 PM
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Well, there is going to be a gain or a loss. Being able to forecast reported gains and losses of a specified period of time for an insurance company is always going to be a problem.

I mean, is someone forecasting the paid claims as well?? "I think there will be a work stoppage in claims processing in Dec 2018, followed by a spurt in claims paid in Jan 2019. Therefore, claims paid in 2018 will be lower than otherwise expected, and the IBNR at the end of the year will be high." Child, please.

Yes, if you lower them, there will be a gain. If you were wrong about lowering them, there will be a corresponding loss in a future reporting period when the wrongness is realized.
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  #16  
Old 03-15-2018, 12:57 PM
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At this point, let me suggest that the OP think about the purpose of projecting IBNR. Is it to get the overall gain/loss? Or is it micromanaging something that has an inherent element of randomness.

Also, what is the purpose of projecting the gain/loss? Is it to be used as a standard of comparison for actual future g/l? Do you have a good idea where the actuals are likely to go?
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  #17  
Old 03-15-2018, 03:41 PM
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Good post from JMO. I still am not sure what it is the OP is trying to do. I'm not sure he does either. This might be a good spot to step back and say "I need to have more information on what this is being used for and how/by whom, before I can actually provide the requested info."

It's very common for actuaries to be asked to provide X, and when the actuaries ask "What's that for", the response is "Don't worry, just give us the info". The decision to accept that answer or push back is tricky and one that takes some experience. Might also be good to approach another actuary at your workplace that can give you some friendly advice.
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  #18  
Old 03-15-2018, 10:03 PM
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I appreciate the advice.

As I have mentioned, ultimately, I want to project the right expected overall gain/loss, for the current Full Year, and also for the next couple of full years. Yes, it is to be used as a standard of comparison for actual future g/l. It is also to be used today by senior management. If we restrict ourselves to Inforce business (excluding New Business), the actuals might not be that far off.

Claims paid are forecasted, yes. By an actuarial software. But the actuarial software currently does not calculate IBNR, project IBNR, or project paid claims due to unreported claims.
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  #19  
Old 03-16-2018, 08:42 AM
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Maybe I'm missing something here. I used to work in life insurance, and for that business there was a lot more to projecting new business than just IBNR.
Who is doing the rest of the new business projection if it's not you?
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And def agree w/ JMO.
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  #20  
Old 03-16-2018, 09:41 AM
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this sounds like projecting loss ratios for budgeting purposes and 3-5 year forecasts
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