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Foundations of Casualty Actuarial Science

(ii) The second principle says an actuarial sound loss
adjustment expense reserve has the same
characteristics except that the liability is for ' the
unpaid amount required to investigate , defend and
effect the settlement of all claims'.

(iii) Since there are is an inherent uncertainty in the
estimation process, a range of reserves can be
actually sound.

(iv) The most appropriate reserve within a range of
actuarially sound estimates depends on both the
relative likelihood of estimates within the range and
financial reporting context in which the reserve will
be presented.

Q5. State the utility of data availability on the loss
reserving process.

Ans. The availability of proper data is very essential for loss
reserving process. The actuary is responsible for
informing the management for the need for sufficiently
detailed and quality data to obtain reliable estimates.

The data presented must clearly display the development

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