Late claims reserves in reinsurance
The "Chain Ladder"? The "Bootstrap"? "Late claims reserves in reinsurance" is a second and thoroughly revised edition of the popular 1989 Swiss Re publication. The new version was authored by Anthony Boulter and Dawson Grubbs, both of Swiss Re's Group Reserves.
Late reported claims, especially on liability insurance, continue to be a problem for insurers and reinsurers alike. The industry has suffered from having to pay huge sums in respect of claims due to asbestos, pollution and mass torts, as well as for professional indemnity, medical malpractice and workers compensation. Each of these claims can be notified years – possibly even many years – after the insurance contract was drawn up, and therefore, they may not be settled for even longer. Actuaries have been working for years to develop methods that can reliably predict the eventual cost of settlement of such claims. While a firm understanding of mathematics is required, elaborate mathematical methods are of limited practical use in determining adequate reserves. Indeed, Swiss Re’s specialists set a convincing example that there is no substitute for experience coupled with business knowledge and a thorough analysis of the data.
Targeted at general management, claims managers, underwriters and accountants the publication will give insight into why reinsurers need to hold additional claims reserves over and above the claims estimates that the ceding insurer supplies. It includes the commonly used reserving methods, illustrating them with practical examples, and includes a reference to discounting, bibliography and glossary. As such, it may also be useful to insurers' clients who wish to know more about this aspect of insurance generally.
