The Effectiveness of Reserving Methods working party is seeking volunteers who can spare a few hours of time to participate in a major research exercise that it has launched. The objective of this exercise is to test empirically the effectiveness (or otherwise) of a variety of reserving methods by asking a large number of actuaries to perform projections on a wide range of different data sets using a variety of actuarial projection methods.

This is an ambitious research exercise - one that has not been attempted before - and is of great importance to the profession. Our target is to recruit over 100 volunteers from the UK alone - and we hope to be able to attract a similar number from our US colleagues, and more still from Australia and continental Europe. We are therefore appealing to all GI actuaries to volunteer just a few hours of their time to make this exercise a success.

We are very excited about this project - and we hope you will be too! From our own "dry run" of the testing exercise, we've found it fascinating to observe, over the course of a few lunch hours, how different methods respond to different features in the data over the course of successive year-ends - a process that normally takes several years. And, if this is not enough to whet your appetite, then there is the added attraction of a prize draw (with some highly impressive prizes - see below) for all testing volunteers.

How will the exercise work?

Template
We will provide you with a ready-to-use projection template, fully populated with data, background information and diagnostic exhibits. This will allow you to focus your efforts on the key actuarial judgements.

Projections
You'll be asked to project the data at 5 consecutive year-ends using a variety of methods. The spreadsheet has been automated to reveal one year-end at a time, and one method at a time. If you prefer, you are welcome to copy the data into your own reserving software, and to perform the projections there.

Feedback
On completion of the exercise, you'll be able to track how each of the methods has responded to the data over the course of the 5 year-ends. In addition, we will subsequently provide you with feedback comparing your own estimates against other testers’ estimates, as well as the actual outcome.

Time committment
The working party members have performed a "dry run" of the testing exercise, and have found that the entire exercise should take no more than half a day, which can easily be spread over a few lunch hours. We'll be asking testers to complete the exercise by Wednesday 6 August..

Prizes!
As mentioned above, there will be a prize draw, into which all testing volunteers will be entered. There will be five prizes:

• A Nintendo Wii games console
• A bottle of Chateau Mouton Rothschild 2001*
• A helicopter tour of London*
• Dinner for two at Gordon Ramsay at Claridge's
• An iPod Touch

* Local alternatives available.

Everyone who participates in the testing exercise will be entered into a prize draw. The winners will be randomly selected and, in particular, there will be no advantage to be gained by getting the "correct" results to the projections. The only way to increase your chances of winning will be to volunteer to perform projections on more than one class of business, in which case multiple entries into the prize draw will be permitted.

How do I participate?
If you are willing to participate in this important exercise, please send an e-mail to giroc@actuaries.org.uk. You will then be sent a copy of the testing spreadsheet, together with instructions. Testing should be completed by Wednesday 6 August.

Once you've finished your analysis, please save the spreadsheet, and send it to giroc@actuaries.org.uk, where your submission will be anonymised before being forwarded to the working party members. If you have any queries please contact Peter Stirling, Secretary to the UK Profession's General Insurance Practice Executive Committee at peter.stirling@actuaries.org.uk.

Steven Fisher
Chairman,
GI ROC Effectiveness of Reserving Methods Working Party

For details of GI ROC and its working parties, please go to:
http://www.actuaries.org.uk/practice_areas/general_insurance/people/committees/giroc