The reserving of non-standard classes of insurance

Document description

It is not long since the Institute/Faculty produced the new Claims Reserving Manual. This has two volumes describing a large number of reserving methods. However, most of these methods are for standard classes. They rely to a considerable extent on various conditions which are presumed to apply such as: Adequate data; Homogeneity of data; Regular development of data; A stable mix of business and types of claim over time; Absence of calendar year effects on development data; No abrupt changes in circumstances (legal, administrative, or otherwise); Past development of data being a reliable indicator of future development; Annual policies; High frequency/low severity. This paper examines a number of methods which can be used for classes of business, or sub-sections of classes, where some of these conditions do not apply. As the methods are designed to overcome similar problems it is likely that the solution to reserving for any other non-standard class can be found by examination of the various approaches in this Paper.