Terms of reference

1. The Working Party (WP) is constituted as a sub-committee of ROC, and will report to ROC. The chairman of the WP will be a member of ROC and will be responsible for co-ordination and communication between the WP and ROC.
2. The WP will report progress on a regular basis (eg monthly or bi-monthly) to ROC. This will include actions planned, issues identified, emerging conclusions, and progress against timetable.
3. The deliverables of the WP will include a report for GIRO 2007. This report and any other deliverables will be provided to ROC in draft for comment before wider distribution by the WP. In any reports or other deliverables or communications made by the WP, the WP should not claim to speak with the authority of ROC or the GIB without prior approval of ROC.
4. This Working Party will review previous work on this topic, including that undertaken by GRIT, and previous GIRO papers relating to the reserving cycle, and identify areas for further research.
5. We will investigate further the effect of the underwriting cycle on traditional reserving methods and consider ways of compensating for cycle effects.
6. The Working Party will undertake or commission research to:
   • Enhance understanding of drivers of the reserving cycle
   • Develop actuarial methods for dealing with the u/w cycle, eg cycle invariant curve fitting
   • Investigate the extent to which the reserving cycle is a function of management decisions as opposed to variation in actuarial estimates
   • Design and validate rate indices
7. We will consider whether some form of actuarial guidance on this topic would be beneficial.