Unstable Loss Development Factors

Most actuaries learn loss development on the job and pick up whatever techniques are being used by those around them. The experienced actuary is exposed to many varieties of methods and techniques. In dealing with unstable triangles, actuaries will employ myriad assumptions, judgments and tools along the way to selecting loss development factors. The authors describe a recent survey demonstrating the variety of methods and variability of selections of loss development factors (prior to consideration of the tail) and the variability of the resulting reserve projections.

Keywords: Reinsurance Analysis, Trend and Loss Development, Reserving Methods, Reserve Variability, Uncertainty and Ranges.