Statistical Methods for the Chain Ladder Technique

This paper considers the application of loglinear models to claims reserving. The models encompass the chain ladder technique and extend the range of the possible analyses. By bringing the methods within a statistical framework, a coherent strategy for testing goodness of fit and for forecasting outstanding claims is produced. Improvements to the basic chain ladder technique are given which use Bayesian methods. Keywords: claims reserving, linear models, Bayes and Empirical Bayes methods, state space models, chain ladder.