Understanding, then managing, loss reserve volatility

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By Chad C. Karls | 01 July 2008

The loss reserve is typically the most uncertain component of a property and casualty insurance company's balance sheet, and changes to loss reserves have the potential to significantly affect earnings. This Physician Insurer magazine article offers unique Milliman research into the best approaches to estimating an appropriate reserve range, including an explanation of the so-called "bootstrapping" method. It also includes a case study on how to use a company's own policy history to more accurately estimate possible future losses and the reserves needed to cover these losses.

Originally published in the Third Quarter 2008 issue of Physician Insurer, this article is posted with PIAA permission.