Deterministic claims reserving in short-term insurance contracts
Date
2006Author
Mureithi, Abednego T.
Weke, Patrick G. O.
Type
ArticleLanguage
enMetadata
Show full item recordAbstract
Claims reserving for general insurance business has
developed significantly over the recent past. This has been
occasioned by the growth of the insurance market, with the risk
underwriting process becoming more and more complex. New
insurance products have been developed that cater for the more
specific needs of the policyholder. Latent claims have also arisen
in recent years, putting major strains on company resources. The
case of asbestosis related claims testifies to this, having received
widespread attention. Furthermore, recent disasters, such as the
floods in Europe and the September 1 I III terrorist attacks on the
U.S. have contributed to the need for more complex ways of
analyzing claims experience. The suitability of the models used in
claims reserving, have had to be reviewed to ensure that they do
not give false impressions. The object of this paper, therefore, is
to come up with a comparison of different methods of claims'
reserving for a general insurer with a given claims' experience.
The suitability of each of the estimates is noted to depend on the
purpose of the reserving exercise. The paper discusses some of the
methods (for instance, the basic chain ladder method, inflation
adjusted chain ladder method, separation technique and
Bornhuetter-Fergusson technique) used in claims' reserving, and
for a particular claims experience, it gives an analysis of how well
each of the methods models claims experience.
Citation
The East African Journal of Statistics Volumel, Number 2, pp. 198-213Publisher
JKUAT Press Ltd Department of Mathematics, University of Nairobi