A Mathematical Model for Loss Reserve Analysis

It has long been recognized that loss reserving is, or should be, within the domain of the Casualty Actuary; but in no other area have we applied our expertise with as little success. WC have devised classification systems which generate unique automobile insurance rates for single female farmers living in Manhattan and we have developed so many formulae for partial credibility that we arc in danger of losing ours. In our sixty year history we have truly put the “science” in “actuarial science.” But, as a review of the experience of the past few years points out, we still have difficulty establishing accurate loss reserves.