Reported loss development method
Reported loss development method. Case basis reported losses are projected to ultimate values based on historical development patterns. Historical loss development factors are reviewed and forecasted factors are selected. The selected factors are used to project ultimate paid losses. This method is most reliable when the insurers have stable case reserving practices. The case reserving practices of the participating companies combined are generally stable but at least one major insurer does not have stable case reserving practices.
Paid loss development method
Paid loss development method. Paid losses are projected to ultimate values based on historical development patterns. Historical loss development factors are reviewed and forecasted factors are selected. The selected factors are used to project ultimate paid losses. This method is most reliable when payment patterns are stable over time. The payment patterns for medical malpractice are not generally very stable, particularly for early levels of development.
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