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Case estimate definition?

I

ig_21

Member
Hi,
I'm slightly confused about what we mean when we say case estimates. Is it the outstanding claims reserve only or does it include IBNER?
Thanks.
 
The Core Reading defines Case Estimates on page 41 of Chapter 11 (Data) as follows:

"These are the latest estimates of the cost of each claim of which the insurer is aware."

So yes the case estimates are the outstanding claims reserves for those claims which have been reported to the insurer. Strictly speaking the term only applies when the amounts have been individually assessed on a case-by-case basis.

By contrast the IBNER or Incurred but not Enough Reported Reserve is an estimate of the difference between what the insurer is currently holding in respect of the claims that have already been reported to it and what those claims will ultimately end up costing the insurer. This can be be positive or negative.

The Glossary defines IBNER as:

"A reserve reflecting expected changes (increases and decreases) in estimates for reported claims only."
 
The Core Reading defines Case Estimates on page 41 of Chapter 11 (Data) as follows:

"These are the latest estimates of the cost of each claim of which the insurer is aware."

So yes the case estimates are the outstanding claims reserves for those claims which have been reported to the insurer. Strictly speaking the term only applies when the amounts have been individually assessed on a case-by-case basis.

By contrast the IBNER or Incurred but not Enough Reported Reserve is an estimate of the difference between what the insurer is currently holding in respect of the claims that have already been reported to it and what those claims will ultimately end up costing the insurer. This can be be positive or negative.

The Glossary defines IBNER as:

"A reserve reflecting expected changes (increases and decreases) in estimates for reported claims only."

I don't think that you've answered the question.

When a claim comes in the case reserve that is put on it will take into account the information that has been reported but it is conceivable (is it not?) that an additional claim loading is included as well on the case reserve to allow for IBNER directly? (Prudent case reserving.)

I think that the answer is that it depends on the case reserving philosophy of the company in question. Case reserves are not always equal to the final reserve figure so it is usually the case that they allow for some IBNER.
 
I don't think the case estimate include the IBNER. The former estimate is usually made by the claims manager but the latter is usually done by the actuary.

If the claims manager overestimates the claims, then it is possible for the actuary to set up a negative IBNER.
 
I guess this is another example for defining the terms we use. Hopefully in an exam it should be clear what the case estimate is intended to include
 
Shillington's right.

Generally speaking, the case estimate is just the amount booked into the system. This may be prudent, in fact it often is. If it's prudent, there's an implicit IBNER included in the case estimate figure.

In short, it's always a good idea to try to understand the degree of prudence in the case estimates.
 
From something that seemed quite a simple term, now I'm starting to get confused..

If a case estimate = full estimated loss on a claim (i.e. paid + O/S) .... then isn't case estimate the same as incurred? (if this is the definition of incurred you are using). Reading the course notes in Chp12 Pg 36, I interpreted that a case estimate follows the definition at the start of this parargraph i.e. a latest estimate of costs.

The definition used above in the thread where it refers to only O/S amounts sounds more like a case reserve (which is case estimate - paid already)? Is this just down to definitions as I'm not sure which one the course notes is referring to? (now in Chp12 Pg36)

If the first is true, what do we get from the diagnostic, case estimate to incurred ratio? What is that telling us?
 
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Case estimate and case reserve are basically the same thing and only relate to the amounts still to be paid and do not include the amounts already paid to date.

The case estimate to incurred ratio is discussed in Section 2.4 of Chapter 17.
 
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