Health valuation and reserving techniques have remained fairly constant over the past several decades
while market pressures have increased dramatically. Today health carriers need to make more effective
use of capital and to have more stable and/or understandable financial results. Since reserves are the
largest liability on the balance sheet for most health insurers, there is a strong demand for better
estimates. The first challenge for actuaries is to define what "better" means. There are many different
definitions of the "right" answer; such as an answer that provides information about risk, or an estimate
that guarantees solvency. The second challenge is to help our constituents understand the limits of
making estimates. The final challenge is to develop new tools.
As a result of this session, you should be able to understand how your reserving techniques meet the
needs of your constituents and how your methodologies may need to be changed. An employer or client
would want their actuary to attend this session in order to gain an appreciation of the pressures on
business and how the effects of reserving permeate all financial activities of the company.