Discover the transformative power of Excel for Actuaries – today’s tool is vastly more capable than just a year ago! Back then, you might have found yourself grappling with every …
Surety Bond: How Do They Actually Work & Actuarial Considerations
Surety bonds are a type of financial guarantee that protects against potential losses or breaches of contract. They are commonly used in construction, government contracting, and other industries where performance …
Expected Loss Ratio (ELR Method)
ELR Method? Expected loss ratio (ELR method) is a technique used to determine the projected amount of claims, relative to earned premiums. The expected loss ratio (ELR) method is used …
Loss development factors (LDF)
Loss development factors or LDFs are used in insurance pricing and reserving to adjust claims to their projected ultimate level i.e to Ultimate Claims. Insurance claims, especially in long-tailed lines such as liability insurance …
Bornhuetter Ferguson Technique: If the development is maturely immature.
What is Bornhuetter Ferguson Technique The Bornhuetter Ferguson technique (BF Method) is a method for calculating an estimate of an insurance company’s losses. The Bornhuetter Ferguson technique, also called the Bornhuetter …
Chain Ladder Method (CLM): the most common reserving method and steps to apply
The chain ladder or development method is a prominent actuarial loss reserving technique. The chain ladder method is used in both the property and casualty and health insurance fields. Its …
Introduction of Run Off Triangles in Reserving
When a claim event occurs there will be some time before it is reported or notified to the insurer – this is known as a claim delay. The insurer will …
Decoding Earned Premiums & Unearned Premium Reserves (UPR): A Comprehensive Guide to Calculation and Methods
What Is Unearned Premium? Unearned premium is the premium which is corresponding to the time period remaining on an insurance policy. These are proportionate to the unexpired portion of the insurance premium paid and …
Introduction: Incurred But Not Reported (IBNR Reserves)
Incurred But Not Reported or IBNR reserves are a part of claims reserves estimated by insurers for reporting on their financial statements. Claims reserves are estimates of claims that have …
Mack Method in Stochastic Reserving
Thomas Mack, In his original paper outlines a method to estimate the standard error of chain ladder estimates. The Method is now is generalised with the name of Mack Method. …