Not quite right folks.
Here's a summary.
It doesn't matter whether you use paid or incurred data, your reserves will include the same components.
The only thing which affects what is included in the reserves is which origin period you use: ie underwriting year / accident year / reporting year.
So the elements included for each cohort is:
RY
● reserve for outstanding reported claims only
AY
● reserve for outstanding reported claims
● reserve for IBNR claims
UY
● reserve for outstanding reported claims
● reserve for IBNR claims
● reserve for unexpired risks
All of the 3 cohorts may include:
● IBNER
● claims handling expenses
● reopened claims reserve
● recoveries from salvage and reinsurance
if these are included in the past data.
As to your final question Jensen:
The "outstanding claims reserves" is basically all unpaid claims (ie ultimate - paid). I quite agree that it feels ambiguous because we would also say "outstanding claims" when referring to case estimates (ie reported unpaid claims"). Just try to think of IBNER as "movements in case estimates", after all, claims can settle for more / less than expected.
Kind regards,
Katherine.
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Hi
so when we talk about outstanding claims that are part of incurred- are these all claims that have started being paid or can they be claims even that haven’t been paid and have been reported? mom getting confused as to what this outstanding and the outstanding in ‘outstanding claim reserves for AY and RY mean? Do these mean estimates for all reported claims that haven’t started being paid while the outstanding in incurred is estimates for all reported claims that have been paid?
Last edited by a moderator: Apr 2, 2022