Trending to the Future In a prior blog article, we discussed loss development factors and IBNR analysis. The IBNR analysis includes the estimation of ultimate incurred losses for past years, but what about future years? If we also have an estimate of exposures, then we can compute pure loss rates (trended losses per some unit […]

Cyber risk is likely the most significant property casualty risk to emerge in recent times. Premiums for cyber risk are growing significantly, and daily headlines bring attention to yet another major data breach affecting an entity. Most of us with credit cards have probably had new cards issued because of a breach in the last […]

Many companies have a liability associated with retained losses through self-insured retentions or large deductible programs for a wide array of risks. These can include workers compensation, automobile liability, general liability, medical professional liability, and property. Most companies use an actuarial report to determine the net retained liabilities for these risks. However, many auditors and […]

I have found that interviews can often produce interesting results and insights. So, this month, I decided to sit down with Tony King, one of our actuarial analysts, and discuss the popular topic of loss development factors. The conversation has been edited for clarity, but I think you will find it a good review with […]

A few months ago, we conducted a survey concerning the utilization of analytics in the retention decision process.  As I continue through the PhD program at Oklahoma State University my prospective dissertation topic continues to move toward the study of analytical capabilities within an organization and its correlation with organizational performance. While the risk management […]

Loss simulations and confidence level analyses are important tools when budgeting for projected losses in the upcoming year. The projected loss pick determined by an actuary provides the expected or average value of losses, but it is also important to understand the volatility around the projected losses or to compare the effects of various per-occurrence […]

In the SIGMA Tech Talk titled “Understanding Loss Development Factors,” we introduced IBNR losses as those losses which occur during a loss period but are not reported until a later date. The definition of IBNR also typically includes development of known claims. In this article, we look further at the significance and calculation of IBNR […]

Whether you are a broker, CFO, or risk manager, you have probably heard the terms loss development triangle, loss development factor, and IBNR (incurred but not reported losses). These are often included in the first analytical step of an actuarial analysis. Yet a survey of insurance professionals would likely result in a long list of […]

An underwriter once emailed me declaring that the IB and R load was too high on a particular account. I never had the heart to ask him what the letters I, B, or R signified in that statement, but obviously that must be what IBNR sounds like when pronounced too fast or with an accent. […]

The narrative support to an actuarial report or analysis normally contains a summary of loss development and loss development factors similar to this: The ultimate cost of claims reported in a specific time period is usually not known until several years after the close of that period. Therefore, loss development factors are used to project […]