Claim reserves are the largest liability on most property/casualty insurers’ balance sheets, and claim reserve inadequacy is the biggest risk faced by many of these insurers. Both internal and external users of insurer financial statements rely on the actuary to do the best possible job in estimating claim liabilities. In this regard, how does the actuary know that the actuarial methods chosen to estimate the insurer’s claim liabilities are the best methods?
This general session will present a performance testing methodology that can be used by the practitioner to evaluate the robustness of actuarial methods for the task at hand. The presentation will offer real-world examples. Practitioners who have employed such methods will provide insight to their application, accuracy, efficiency, and utility.