The Actuary's Job With Respect to Reserves

It is the actuary's job to determine the value of the unpaid losses and loss expenses for which a company is liable at any point in time. This is done in bulk to reflect payments on cases not yet reported IBNR (Incurred But Not Reported) and adjustments to case reserves established by the claims examiners IBNE (Incurred But Not Enough). How can a value can be placed on accidents which have happened but have not yet been reported to the claims department? The next two pages will help to explain this.

Required Steps on the Way to Establishing the Value of Reserves

To conduct a study of an insurer's claim information, the actuary first needs to analyze and evaluate the following within the company's various departments.

1. Claims Department
   • Payment records
   • Case reserves
   • Reserving practices
2. Data Processing
   • Claims data
   • The quantity and nature of any data backlog
   • The impact of changes in data processing operations
3. Accounting and Underwriting
   • The company's draft financial statement and underwriting guidelines

Copyright © 1996, 1997 Maher Associates, Inc.
Last modified: January 1, 1997