Loss Reserving Without Loss Development Patterns- Beyond Berquist-Sherman

This paper describes loss reserving techniques that may be used in situations where changes have occurred that render past years" loss development patterns inappropriate for use in estimating loss reserves for more recent years. The loss reserving issues addressed by this paper are generally the same as those covered by James R, Berquist and Richard E. Sherman in their paper Loss Reserve Adequacy Testing: A Comprehensive, Systematic Approach, PCAS LXIV, 123. The essential difference in techniques is that while Berquist-Sherman restates prior years" development patterns to be applicable to the current evaluation basis, this paper restates the current diagonal to the level implied by the older years' estimates, This restatement is done on an implied ultimate basis, thereby eliminating the need to apply loss development patterns to the less mature years.