RESERVING ACTUARY’S
INTERACTION WITH
UNDERWRITING
A REINSURER’S PERSPECTIVE
GARY KOUPF – EVEREST RE
CLRS 2004
Uniqueness of Reinsurance
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No Standard Classes
Unique Contracts
Multiple Lines
Individually Priced
CLRS 2004
Some Common Elements
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Pro Rata vs. Excess of Loss
Risk Attaching vs. Losses Occurring
Occurrence vs. Claims Made
Working Layer vs. High Excess vs. Clash
CLRS 2004
Interaction Begins When
Contract is Written
• Contracts are Grouped
– By Profit Center
– Homogeneous as to
• Expected Emergence Pattern
• Rate Adequacy
• Terms and Conditions
– Defined by the Actuaries with U/W Input
– Groups Evolve Over Time
– Same Groups Used in Planning
CLRS 2004
Planning Process
• Projections of
– Volume
– ELR
– Commission Ratio
• Reviewed by Actuary
– Documentation, Rationale, Fit With Experience
• ELRs Used as A Priori Loss Ratios
CLRS 2004
Reserve Study
• Premium Projections
– Premiums Recorded
• As Deposits
• As Reported
– Actuary Analyzes Triangles in Reserve Study
and Reviews With U/W
– Integral to IBNR Estimates
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Reserve Study
• Results Reviewed By U/W
• Useful Summary Exhibits
– ULRs By Year/Group
– ULRs, CRs as Compared To Plan
– Current ELRs and Recommended Changes
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Interim Analysis
• Quarterly Expected vs. Actual by
Group/Year
• Summaries by Group and Department
• Discussed/Reviewed With U/W
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Loss Sensitive Contracts
• Contingent Commissions
• Retro Premium (Swing Rated)
• Rely on U/W for Identification and Terms
CLRS 2004