Friedland04.Meetings

Reading: Friedland, J.F., Estimating Unpaid Claims Using Basic Techniques, Casualty Actuarial Society, Third Version, July 2010. The Appendices are excluded.

Chapter 4: Meeting with Management

BattleTable

Based on past exams, the main things you need to know (in rough order of importance) are:

• fact A...
• fact B...

reference	part (a)	part (b)	part (c)	part (d)

In Plain English!

Here is the point of this chapter:

To do a reserve analysis properly, you need more than just the data. You have to know what's going on within your company.

When I first started working at National General in NC, our written premiums for auto suddenly began rising by 20-30% in many states. We were like, what in the world is going on? We couldn't just start in on the analysis without without investigating that. Well, it turned out that many product managers had relaxed the underwriting criteria in their state specifically because they wanted to write more business. (The new bonus program rewarded premium growth.) Obviously that information has to be factored in to how we doing the analysis. (Spoiler: The losses began rising about 6 months later.)

So, you have some sense for what's going on in the main operational areas of your company:

• claims
• U/W (Underwriting)
• data processing
• accounting
• ratemaking

The source text lists about 5 million different questions you might ask management in these areas, but you don't have to memorize them. Alice suggests taking 10 minutes to scan the list of questions in the text and pick out 1 question from each category to memorize. Here's what Alice came up with:

for a claims manager:

• is the claims department settling claims more quickly compared to last year (or more slowly)

for an U/W manager:

• have there been changes in mix of business over the last few years (Ex: geographical changes, hanges in deductibles)

for a data processing manager:

• can the data be subdivided into categories like policy limit?

for an accounting manager:

• has there been a change on the date when the books are closed for the quarter?

for a ratemaking actuary or product manager:

• were there any recent court decisions that could increase our liability?