Which methods are best when reserving for annually renewable group life schemes, where premiums are payable monthly. I had thought of the following: 1. Sum at Risk *qx . What is the reasoning behind this when setting reserves? 2. Calculating Unearned Premium Reserves. Is this valid? 3. Calculating IBNR reserves using runoff triangles. However, I find this inappropriate when claims are settled immediately. 4. Just setting the reserves as certain percentage of the total annual premiums, say 15%
Not sure this is in the right place - feels beyond ST2? If you account for the monthly premiums not yet received then holding a UPR for the outstanding part of the year could be appropriate - probably for larger schemes. But assumes premiums are adequate so might need to held more if not. There can still be reporting delays on life assurance and so holding an IBNR should be considered - though might not be that significant. Using run-off triangles might be suitable if enough data. 4. could end up being similar to 1 or 2 depending on what x% you choose. Might have to vary by scheme but depends on what you;re trying to cover. Eg all schemes, and you have lots with varying start dates etc.
