Reserving Techniques – Chain-Ladder

The Chain-Ladder is an reserving technique often used to predict future claims for an insurance company. It uses run-off triangle of paid or incurred losses. There are several considerations as not to distort the numbers, for instance changes in premium. This subject can be made arbitrary complex however for the purpose in this text we assume that this has been handled and we focus on the practical steps to be…

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LAT – Liability Adequacy Test

International Financial Reporting Standard 4 required liability adequacy testing (LAT). In non-life insurance, the most important components of LAT are run off analysis for claims provisions and unexpired risk reserve (URR) calculation. URR is defined as a prospective assessment of the amount that needs to be set aside in orders to provide for the claims and expenses which will emerge from unexpired risks and which is over and above the unearned premium reserve…

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