In 2011, SIGMA’s Tim Coomer authored a blog titled "Understanding Loss Development Factors” in response to the numerous questions we received on the concept of loss development. Since then, it has become SIGMA’s most viewed blog of all time and continues to receive significant amounts of views on a monthly basis. Between Tim's ability to break down complex topics and the pervasiveness of loss development factors in actuarial analytics, it's no surprise that the article has sustained such a high level of popularity. Consider, for example, some key highlights of what Tim was able to convey:

• Differences between the various types of loss development factors – incurred, paid, claim count, etc.
• The structure of a loss development triangle, which requires accumulating and summarizing data over many consecutive years.
• How loss development patterns may be affected by legislative changes, shifts in geographic risk exposure, changes in retention, and many other factors.
• The difficulties involved in selecting loss development factors when the historical data is volatile, lacks credibility, or exhibits abnormal trends.
• Why some risks have development patterns that last for many years, whereas others may be relatively brief.

An abundance of material on loss development factors can also be found on SIGMA’s complimentary educational portal.  In particular, Chapter 2 of our book, An Actuarial Advantage, covers the topic in further detail, and the following resources offer additional insights and perspectives:

Blogs:

• Loss Development Factors: A Primer for Captives
• Common Mistakes Using Loss Development Factors

Videos:

Training videos will require access to RISK66's complimentary education portal.

• Loss Development Factors
• Loss Development Triangles
• An In-depth Look at the Incurred Method
• An In-depth Look at the Paid Method
• An In-depth Look at the Case Method
• Lunch & Learn Webinar 9: Assessing Changes to Loss Development Factors

One-page Educational Resources:

• The Loss Map Graphic
• Components of a Loss Analysis

If you need more information on loss development factors, please contact us at support@SIGMAactuary.com or schedule a call with one of our consulting actuaries.

© SIGMA Actuarial Consulting Group, Inc.