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Reserving cycle - ch 15

D

DanielZ

Member
In chapter 15, page 23, the notes state that in a soft market, incurred claims development patterns are slower to develop.

One of the potential reasons given for this is an increasing tendency to dispute claims. Why would there be an increasing tendency to dispute claims in a soft market?

Edit: Thinking about this again, I guess the insurer is more likely to dispute claims because their profit margins are being squashed in a soft market
 
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Hi DanielZ

Yes that's right an insurer may be more likely to dispute claims in a soft market when margins are tight which could slow the claims development down.

This also links to the previous bullet point "the effect of weakened terms and conditions". If t&c's have been weakened as they might be in a soft market due to competitive pressures, then this might also open the door for more disputes.
 
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