Friedland02.ClmsProcess

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

Chapter 2: The Claims Process

Study Tips

If you've been working at an insurance company for a few years then much of this chapter covers material you already know. The 2 items to pay close attention to are:

• 5 elements of the unpaid claim/loss estimate
• formula for reported claims/losses

Aside from that, the wiki provides a brief summary of each subsection with the chapter. If you want more detail, you can use the source text for bedtime reading.

Estimated study time: 1 hour (not including subsequent review time)

BattleTable

• this reading has not been tested on any exam from the year 2012 and subsequent

reference	part (a)	part (b)	part (c)	part (d)
no prior questions

In Plain English!

5 components of the total unpaid claim estimate

Further down I've listed the 5 components as they are listed in the source text but Alice-the-Actuary has a tip for you.

Alice's tip: Usually, we work with only with 2 components: case O/S and IBNR.

• Case O/S is just a short way of writing Case Outstanding. It's also referred to as Case Reserves. The definition is given below.
• IBNR is a short way of writing Incurred But Not Reported.

And here's a nifty formula that will be mega-useful:

Alice's mega-useful formula:    total unpaid claims/losses   =   Case O/S   +   IBNR

Case outstanding

Case outstanding (also called case reserves) is estimated by the claims adjuster. It is:

• the estimated amount the claimant will be paid to settle this particular claim

This amount is rarely accurate for individual claims.