Evaluating The Impact of Inflation on Loss Reserve [Review]

In evaluating loss reserves, actuaries regularly make use of quantitative techniques which use the past to project the future . Any such approach to reserve analysis requires the assumption that the dynamics underlying the toss settlement process are both stable and persistent. For example, the use of paid toss development factors to estimate toss reserves for any given year assumes that the pattern of loss development for that year is stochastically similar to the pattern for other years and that this similarity will persist for the foreseeable future. When this assumption holds, estimates of toss reserves made using averages from past data will be unbiased with respect to the future .