Page 169 - ic92 actuarial

Foundations of Casualty Actuarial Science

system speeds up claim settlements. Claim adjusting
practices may also change because of office consolidation
or new management.

To produce meaningful loss reserve estimates, data is
divided into homogenous groups. The focus is kept on
grouping the data that displays similar ( i) Loss
emergence pattern- length of time between loss
occurrence and reporting . (ii) Loss settlement patterns
- length of time between loss reporting and claim
settlements .

Some examples of common division includes segregating
data by line of business, coverage type and policy limits.
The groups should have businesses with similar
frequency and severity characteristics . actuaries use
the term credibility to imply the measure of predictive
value of a block of data.

Increasing the homogeneity and or increasing the volume
of data increases credibility. Whenever there is
conflicting goals, the analyst needs to strike an

Sashi Publications - www.sashipublications.com 169

Copyright@ The Insurance Times. 09883398055 / 09883380339