E
entact
Member
Hi
I'm studying for ST7 and I'm a little stuck in the topic of outwards reinsurance reserving. The core reading provides details of 5 methods of reserving for reinsurance from the perspective of a direct insurer. The methods covered include 'gross less net', 'application of standard techniques to reinsurance data', 'use of appropriate factors' etc.
My first question is why a direct insurer needs to reserve for reinsurance recoveries? I get why an insurer would need to reserve for future claims but since the reinsurance premium is know and recoveries are a positive cash flow , where does the need to reserve apply?
My second question relates to the methods covered. The detail given in the core reading is very concise and does not give examples illustrating the various approaches. I've looked through past exam questions (of which there is only 1), Aset, questions bank etc. and there's nothing in the way of a clear explanation of the approach through an example. Does anyone know any resources that might illustrate by way of examples the various methods of outwards reinsurance reserving.
There is an article called 'reinsurance reserving' by Michael Radtke in the 'Encyclopedia of Actuarial Science' published in 2006 but I don't have access to it - does anyone know of any good resources in this area as I'm pretty lost! Thank you in advance.
I'm studying for ST7 and I'm a little stuck in the topic of outwards reinsurance reserving. The core reading provides details of 5 methods of reserving for reinsurance from the perspective of a direct insurer. The methods covered include 'gross less net', 'application of standard techniques to reinsurance data', 'use of appropriate factors' etc.
My first question is why a direct insurer needs to reserve for reinsurance recoveries? I get why an insurer would need to reserve for future claims but since the reinsurance premium is know and recoveries are a positive cash flow , where does the need to reserve apply?
My second question relates to the methods covered. The detail given in the core reading is very concise and does not give examples illustrating the various approaches. I've looked through past exam questions (of which there is only 1), Aset, questions bank etc. and there's nothing in the way of a clear explanation of the approach through an example. Does anyone know any resources that might illustrate by way of examples the various methods of outwards reinsurance reserving.
There is an article called 'reinsurance reserving' by Michael Radtke in the 'Encyclopedia of Actuarial Science' published in 2006 but I don't have access to it - does anyone know of any good resources in this area as I'm pretty lost! Thank you in advance.