Reserving - Part 1 - Incurred vs Paid Claims Chain Ladder

PURPOSE OF RESERVING
1. Delay between claim event and claim settlement date.

2. The ultimate claim cost will only be known after some time.

3. Must set up reserves in respects of those claims to be settled.

Operational Risk Management Assumptions & Judgement

1.Many insurers today adopt Basel definitions (e.g. controls, IT, fraud etc.) but they might not be applied in the same way across industry.

2. Operational risk data restrictions and limitations hinder its known true loss distribution.

Rate Making - Part 3 - Multivariate, Bailey's Minimum, Curve Fitting

MULTIVARIATE TECHNIQUES
1. Many rating variables are correlated.

2. Using a multivariate approach removes potential double-counting and can account for interaction effects.

Rate Making - Part 2 - Deductible Credits and Loss Elimination Ratio

DEDUCTIBLE CREDITS
1. Insurance policy pays for losses left to be paid over a fixed deductible

2. the losses remaining is a deductible credit