Allocation of Reserves and Presentation to Management

The primary reserve problem for an insurance company is the determination of an overall reserve estimate. However, it is often necessary that reserve estimates developed at a corporate level be allocated to sub-units of the company. Some common allocation situation involve the distribution of reserve to profit center, to state, or to agent. Since operational decisions often involve these types of sub-units, the quality and accuracy of reserve allocations is very important. This session explores the methods that can be used for allocating reserves. There will also be a discussion of how the allocated reserves should be presented to management. The panel will focus their discussion on the application of particular methods in a corporate environment: why they are chose, how successfully they worked, and the various problems - both actuarial and nonactuarial - that were encountered.