November is here, and the time is quickly approaching for most companies to complete their annual actuarial report for retained liabilities. As you begin preparing for your company’s year-end 2021 analysis, review the list of tips below to help ensure this process is smooth and effective.

• Do you need reserve analysis numbers in early January? Consider using loss data evaluated as of 10/31 or 11/30. An analysis can be completed using these earlier evaluations with roll-forward reserve estimates for 12/31. Then, an addendum letter can be issued based on a high-level review of the actual 12/31 data.
• Check the status of any COVID-related claims. Are these claims explicitly flagged in the loss run? Be prepared to provide information to your actuary on how these are handled.
• Considering a captive insurance company? Discuss adding multiple retention scenarios to the loss projections in your upcoming report. This will help facilitate discussions related to alternative program structures and options in 2022.
• Has your company experienced significant wage inflation? Be prepared to discuss how wage increases have affected your company’s payroll estimates. These increases can be discussed relative to Average Hourly Earnings (AHE) indices. Note that this also applies to revenue increases related to inflation.
• Review your exposures (e.g., payroll, revenue, number of automobiles) for non-inflationary changes. Be prepared to discuss significant changes related to growth, geographic shifts, or the effect of the pandemic.
• Have any of your retentions changed because of the hard market? Be sure to discuss these changes with your actuary. Retention changes may affect both the reserves for the current year and the loss projection for the upcoming year.
• Is collateral an issue? Make sure that your actuarial report segments the years related to potential collateral concerns. Doing so can aid in future collateral negotiations. Additionally, consider sharing the carrier’s collateral calculations with your actuary.
• Have there been changes in the claims administration philosophy? If so, compile qualitative information related to these changes. Reserve strengthening, for example, can have significant impacts on both loss development factors and ultimate loss estimates.

If you need more information about any of these topics or help with your year-end actuarial analysis, feel free to contact us at support@SIGMAactuary.com.

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